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Fuel shortage hits small dealers, kerosene missing

OMCs deny non-franchised retailers product

In Summary

•During the July-August price review, the Energy and Petroleum Regulatory Authority said no kerosene was discharged at the Port of Mombasa.

•Independent petroleum distributors say OMCs, who receive products directly from Kenya Pipeline Company storage facilities, are concerned over wholesale prices.

An attendant at a Shell petrol station in Westlands, Nairobi, fills a jerican with kerosene yesterday.
An attendant at a Shell petrol station in Westlands, Nairobi, fills a jerican with kerosene yesterday.
Image: ANDREW KASUKU

Parts of the country is facing a fuel shortage despite a stable flow of imports, pointing to a possible hoarding by Oil Marketing Companies (OMCs) speculating higher prices next week.

A spot check by the Star has revealed a shortage of kerosene at major petrol stations in Nairobi, with estate vendors of the commodity making a kill on the little available.

Yesterday, Kenya Independent Petroleum Distributors Association (KIPEDA) said large OMCs are denying small and independent dealers fuel products, leading to a shortage especially in remote parts of the country where major players have no presence.

 
 

KIPEDA chairman Joseph Karanja said the OMCs, who receive products directly from Kenya Pipeline Company (KPC), are concerned over the pump prices, hence refusing to give products on wholesale.

“Independent dealers cannot access petrol and diesel. They (OMCs) say what they have is meant for their stations. They say the price is also lower than their cost so they cannot sale,” Karanja said.

The kerosene shortage could however be a result of a lack of imports in recent times.

During the July-August price review, the Energy and Petroleum Regulatory Authority (EPRA) said no kerosene was discharged at the Port of Mombasa. 

“Accordingly, the prevailing kerosene prices has been maintained but adjusted for the under-recovery of Value Added Tax by Oil Marketing Companies that occurred in the previous pricing cycle,” EPRA director-general Pavel Oimeke said.

The kerosene shortage has mostly affected Nairobi, Eldoret, Kisumu and Mombasa.

KPC yesterday said it has adequate stocks hence there should be no fuel stock shortage in the country.

“We are wet. KPC has sufficient stocks at all depots across the country. There is no shortage,” the state corporation, charged with transporting, storing and delivering petroleum products, responded to the Star.

A source within KPC told the Star there is about 15 million litres of kerosene in its storage facilities, able to cover the next 10 days.

Total KPC fuel storage capacity is 884 million litres.

Large Oil Marketing Companies (OMCs) and retail station dealers are said to be hoarding product hoping pump prices in the next monthly price review by EPRA will go up, based on recovering global crude prices.

Benchmark-Brent crude has recovered from a 20-year low in April when it sunk to $15.98 a barrel. Yesterday, it was averaging $43.37 a barrel.

Last month, EPRA adjusted pump prices upwards where petrol and diesel increased by Sh11.38 and Sh17.30, respectively.

Kerosene, used mainly by households for cooking and lighting, also went up by Sh2.98.

The prices, which became effective July 15 to mid this month, saw a litre of petrol retail at Sh100.48 up from Sh89.10.

Diesel is retailing at Sh91.87 up from Sh74.57 while a litre of kerosene is trading at Sh65.45 from Sh62.46 the previous month.

"The prices are inclusive of the revised rates for Petroleum Development Levy on super petrol and diesel and eight per cent VAT in line with the provisions of the Finance Act 2018, and the tax laws (Amendment) Act 2020," Oimeke said during the review.

In June, EPRA warned against hoarding of petroleum products, assuring the public of sufficient stocks.

“OMCs and retail station dealers found to be hoarding petroleum products risk a one-year jail term or a one million shillings fine including revocation of their licenses, EPRA warned.

According to Oimeke, preliminary investigations had indicated that a number of OMCs were deliberately holding back sales to non-franchised petroleum retailers (independents) in anticipation of a price increase.

“This practice is tantamount to hoarding and is an offense punishable by law,” Oimeke said.

The next price change is expected by Friday next week.

The country has had a constant supply of refined products imported through the Port of Mombasa.

This week alone, six oil tankers are expected to dock at the port, discharging millions of litres of product imported by OMCs.

One tanker docked yesterday, three are coming in on Wednesday while two will dock on Sunday.

The country is a net importer of refined petroleum products where in 2019, the  quantity of petroleum products imported increased by 5.3 per cent to 6.4 million tonnes in 2019-Economic Survey 2020.

Total import bill of petroleum products however contracted to Sh316.6 billion from Sh327.8 billion in 2018, following a significant decrease in international oil prices.