NON-DISCLOSURE

Cofek petitions MPs to smoke out fuel importation cartels

Lobby says fuel importation tender shrouded in secrecy, exhibits cartel-like behaviour

In Summary

•Cofek argues that the only information made public is the “landed cost”.

•It holds that the computation of the same is equally ambiguous.

Cofek secretary general Stephen Mutoro at a past function
OPPOSED Cofek secretary general Stephen Mutoro at a past function
Image: FILE

Consumer Federation of Kenya has petitioned the National Assembly to investigate the open tendering system used in the importation of fuel in the country.

The Stephen Mutoro-led lobby argues that the open tendering system betrays its name as it remains opaque, shrouded in secrecy, and exhibits cartel-like behaviour.

The lobby group argued that the circumstances have denied Kenyan consumers the benefits of competitive pricing.

“The current fuel pricing mechanism does not make necessary disclosures on the procurement of fuel products,” the petitioner said.

Cofek argues that the only information made public is the “landed cost” whose computation is equally ambiguous.

“It is, therefore, almost impossible to tell at what price Kenya secured its oil cargo vis-à-vis prevailing global prices in the market,” Cofek tells MPs.

The Energy and Petroleum Regulatory Authority (EPRA) data indicates that only 13 out of about 96 oil marketing companies participate in the monthly tenders.

“There are credible allegations of a clique of companies dominating oil imports via the OTS in what appears to be cartel-like behaviour,” the lobby said.

Consumers have also decried non-disclosure by the government, regulator, and EPRA on their websites let alone public notices.

The lobby also wants MPs to find out why the information on the tenders is not published on the Public Procurement Information Portal.

“There is no information on when the tenders are floated, bids received and evaluated, cargo sizes, past winners, beneficial owners of the winning bidders,” the petition reads.

Cofek the non-disclosure is against the Constitution which provides for public participation and access to information held by the government.

The group has also cited defiance of President Uhuru Kenyatta’s June 13, 2018, Executive Order which required state agencies to publish full details of tenders.

Cofek wants in this regard that MPs compel the concerned to publish details of the awards – including directors of companies winning the OTS.

The Ministry of Mining and Petroleum has been using the OTS system since 2005 to identify importers of refined petroleum products.

The winning bidders deliver the cargo to the port of Mombasa which is then availed to other market players.

Cofek thus wants the National Assembly to put in place measures to oversight the operations of OTS to promote fairness.

It also wants MPs to develop regulations or legislation to provide for public participation in the monthly tender.

Consumers further want MPs to provide a framework to publicly advertise and make public all tender awards – historical and presently.

They want details of the date of contracts, bidders, when the tenders were floated, bids received, bids evaluation, cargo sizes, and past winners.

The consumer lobby further wants details of the respective storage capacities of the winning bidders and the beneficial owners of the said companies.

“We petition that winning bidders and details on the pricing and delivery schedules should be updated on an online portal immediately the award has been made,” the Mutoro-led team said.

Cofek wants disclosed, the cargo price per litre and a companion of the prevailing fuel prices for gasoline, diesel, kerosene, and jet fuel.

The lobby further wants MPs to order the ministry to open up the OTS system to all oil marketing firms in Kenya as well as global oil traders who wish to participate.

“The increased competition will be beneficial to consumers as the lowest bid will be awarded,” the petition reads.

It also wants MPs to order the Competition Authority of Kenya to analyze the dominance in the OTS.

This would be by analyzing historical data to establish how many times each oil marketing company has won, the prices quoted versus the prevailing global market prices, and the cumulative value of tenders won and the margins accrued therein

“Order CAK to institutes a study into the OTS to flush out any aspects of uncompetitive misconduct such as cartel-like behaviour, price-fixing and market allocation,” Cofek said.

The petition follows in the wake of the National Assembly Finance committee tabling a report with recommendations to reduce the taxes charged on fuel.

The Finance committee chaired by Homa Bay MP Gladys Wanga has proposed a review of the current pricing formula and to determine whether the margins by OMCs are justifiable.