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Kenya's early oil exports were not commercial - PS

Energy PS Andrew Kamau says the 240,000 barrels of brent crude no match for the 264,000 barrels consumed daily

In Summary

•Exchequer would have to provide Sh4 billion per month for Kenyans to enjoy Sh7 discount per liter of fuel at the pumps.

Energy PS Andrew Kamau says the 240,000 barrels of brent crude no match for the 264,000 barrels consumed daily.
Energy PS Andrew Kamau says the 240,000 barrels of brent crude no match for the 264,000 barrels consumed daily. 
Image: FILE

Kenya's initial oil exports under the  Early Oil Pilot Scheme (EOPs) was not for commercial purposes but aimed at marketing the country's crude oil, Energy PS told MPs on Tuesday.

He defended the Sh1.4 billion earnings from the shipment of 240,000 barrels adding that the trucking was was merely to test the country’s logistical capacity, address community issues, and to find out how Kenya’s oil reservoirs behave.

Petroleum Principal Secretary Andrew Kamau told MPs on Tuesday that EOPs was not a commercial venture and was only aimed at finding marketability of Kenya’s crude oil.

He said the sales accrued cannot cushion Kenyans from the high fuel prices.

“EOPS was not about money but about well-test and what the crude will fetch in the market,” Kamau said, adding that the earnings from crude oil are still far from providing reliefs for the rising fuel prices.

Kenyan taxpayers are said to have lost over Sh200 million in the trucking scheme which expired last June.

The PS was appearing before the Energy Committee chaired by Nakuru Town East MP David Gikaria.

The PS said Kenya uses 264,000 barrels of refined petroleum products, which compares lowly to the 240,000 barrels that were realised in the EOPS.

He said this means that the exchequer would have to provide Sh4 billion per month for Kenyans to enjoy Sh7 discount per litre of fuel at the pumps.

“The crude in the EOPS could not have been used to mitigate the situation of oil prices,” Kamau said even as MPs demanded answers on Kenya's high cost of fuel.

Awendo MP Walter Owino, said it was unfortunate Kenyans are yet to reap benefits from the crude oil.

“We got excited when the President flagged off the early oil pilot scheme. When will we convert the stories into actual revenue to be used by Kenyans, and save us from high fuel prices?” he asked.

The Energy and Petroleum Regulatory Authority has maintained that the pricing of petrol, diesel, and kerosene mirrors the prevail prices in the international market.

EPRA acting managing director Daniel Kiptoo said increased landing cost of various fuels since January is to blame.

The authority also attributed the price surge to various legislations by MPs which have since seen the prices shift upwards.

He cited a change in Excise Duty Act, various Finance Bills, road maintenance levy, and to the VAT Act which has seen prices of fuels go up over the years.

MPs also expressed discomfort with the arrangement where the country’s oil reserves are maintained by private companies instead of the government.

Gem MP Elisha Odhiambo said the issue of reserves is a matter of national security cautioning that there could be a crisis in case of unsettled claims by the companies.

But the PS said it was untrue that only national entities do strategic stocks citing cases globally where reserves are kept by private companies.

He argued that it would be costly for the exchequer – Sh82 billion to stock for 90 days, considering the volatility of fuel prices in the market.

On oil exploration in Turkana, the PS dismissed claims of Tullow Oil Plc ceasing operations adding that land acquisition was yet to be done to allow for more production.

He said that with the new requirements for environmental impact assessment, the government would be required to acquire all the land in the corridor.

“The Lapsset to Turkana land has been surveyed. No work has been done in Turkana on land acquisition. It will take some time, say by 2024 if we can sort out the land issue,” PS Kamau added.

Tullow Oil invoked a force majeure over the Covid19 pandemic saying they were unable to go to the field, a move which the government rejected forcing the British firm to go back to the site.