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Greedy oil firms deny Kenyans fuel as they make a killing from exports

Motorists wait their turn to fuel at Shell petrol station section 58 in Nakuru on April 12, 2022. [Harun Wathari, Standard

Some oil marketing companies increased the amount of fuel exported to neighbouring countries while they withheld the product meant for the local market, The Standard has established.

This, according to the Energy and Petroleum Regulatory Authority (Epra), has plunged the country into a crisis.

The fuel shortage has persisted for weeks despite the country having adequate stocks to last for nearly a month.

The oil marketers have been on a campaign to spite the government for delaying refunds it owes them for foregoing their margins at the pump to keep fuel prices stable.

Some of these rogue companies might make billions should fuel prices go up in the review set to take place tomorrow.

The industry expects that Epra will increase the price for the April-May pricing cycle. Sources say retail price of super petrol, which without factoring in the subsidy stands at Sh155 per litre, could go up by upto 14 per cent.

This would mean handsome profits for some of the marketers who are still holding stocks meant for sale over the last one month.

Petroleum products imported in March and April for use in the period between April 15 and May 14 were acquired when crude oil costs were high owing to the Russian-Ukraine war. Murban crude oil averaged at $119 per barrel, at some point hitting a high of $123 per barrel in March.

There are, however, stocks that were bought earlier at much lower prices, which some oil marketers have either hoarded or exported.

Epra data shows that cargo imported in February was priced at an average of $74.36 per barrel.

And yesterday, the regulator moved to punish companies exporting to the region petroleum products originally meant for the Kenyan market.

The regulator reduced the storage capacity allocated to the companies at depots owned by the Kenya Pipeline Company (KPC).

Oil Marketing Companies (OMCs) are allocated storage at KPC facilities based on their market share, with the larger ones getting larger space.

“Epra has analysed the daily petroleum loadings over the past four weeks and noted that a number of OMCs have in the period under review given priority to export loadings while the local market was left to suffer intermittent supply,” said Epra in letter to the oil firms.

“Epra hereby recommends that in the allocation of capacity for the next three import cycles, key consideration should be given to… reduction of capacity share for all OMCs who increased their transit volumes over and above their normal quota during the supply crisis period.”

The letter also notes that the firms that made fuel available in the Kenyan market would see their storage allocation increased.

Kenyans have for weeks now been grappling with fuel shortage. Long queues have become a common feature in the few petrol stations with stocks.

While OMCs have argued that they do not have enough stocks, KPC says its depots, which are used by the oil firms, have enough stocks to last the country more than three weeks.

KPC yesterday said there are 139.58 million litres of super petrol, 123.67 million litres of diesel and 11 million litres of keresone in its depots belonging to different oil marketers.

An industry source explained the preference for export markets by the oil marketers has grown in the recent months owing to delays by the Kenyan government to refund their margins that they have to forego at the pump to keep prices stable.

Unlike Kenya where the companies have to wait for government to refund their margins, they are assured of their margins upfront in such markets as Uganda, Rwanda and South Sudan.

“In the neighbouring markets, the retail prices of fuel, which include their margins, are not controlled as is the case in Kenya. It has meant that in times of crisis such as the hike in the global fuel prices as well as the shortage in Kenya, which has been termed as artificial, they can hike prices and in turn increase their margins,” said the source.

Deputy President William Ruto yesterday called for a speedy resolution to the problem, noting that there has been a disconnect between what Petroleum Ministry officials have been saying and the reality at retail outlets that are consistently without fuel.

“The President signed the Supplementary Budget so that we can sort out the fuel crisis in the country… but the queues are getting longer. Kenyans deserve some answers,” said Dr Ruto.

“The people who have been delegated the responsibility by the President must either up their game or ship out so that other able Kenyans can sort out these matters.”