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Refinery denies blocking oil marketer’s products at port

By | July 22nd 2010 at 00:00:00 GMT +0300

By Philip Mwakio

Kenya Petroleum Refineries Limited (KPRL) has refuted claims by KenolKobil that it was withholding the firm’s products.

The oil firm has been embroiled in a tussle with KPRL since last year after it refused to pay new processing fees.

KPRL said its processing fees have been reviewed thrice in 1999, 2006 and 2008.

Speaking at their Changamwe Oil Refinery plant yesterday, KPRL General Manager, John Mruttu said although KPRL agreement with Kenol Kobil had ended, it has been releasing refined products held in its tanks manufactured before the termination of the agreement.

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"We had earlier had several attempts to amicably resolve the dispute with Kenolkobil, who are one of our clients to no avail,’’ he said.

KenolKobil had refused to pay the revised fees but continued to pay fees at the 1999 levels resulting in arrears of nearly Sh600 million as at end of last month.

Mr Mruttu said the arrears keep on increasing at a rate of Sh20 million per month.

He said KPRL processes crude oil for more than 35 oil marketing companies under terms of identical processing agreements.


These firms are required by legislation to refine 1.6 million tonnes of crude per annum in proportion to their market share.

KPRL charges a proceesing fee which inturn serves as the main income for the oil processing company.

Mruttu, who was flanked by senior KPRL managers including Shyama Maji (Manufacturing Manager, parented from Essar of India), said the income from oil processing was required for plant maintainance and ensuring intergrity and safety of production units, paying of staff salaries and other operating costs.

"Although KenolKobil has been paying lower fees, they are selling products at the same price as other marketers," said Mruttu.

"Kenol Kobil has an unfair advantage and in the process creates an uneven playing field compared to other marketers,’’ he added.

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