State oil firm to import 30% of fuel needs - CS Juma

Energy CS Monica Juma accused independent oil marketers of hoarding, creating the current countrywide shortage

In Summary
  • The shortage has seen a litre of petrol trade at a high of Sh300
  • Kenya has no strategic reserves and relies solely on oil marketers’ 21-day oil reserves required under industry regulations.
National Oil Corporation on Jogoo Road.
National Oil Corporation on Jogoo Road.

The government will grant the National Oil Corporation tender to ship in 30 percent of Kenya's monthly fuel imports to reduce dependency on independent oil marketers.

Energy Cabinet secretary said the government will also build a strategic national petroleum reserve.

Juma who is also the acting Petroleum CS said this is part of a long-term plan to avert future fuel crises such as the one currently being experienced.

The CS did not, however, give details of the plan and how much the government is planning to inject into the struggling corporation. 

"Plans are at an advanced stage to ensure Nock resumes its full mandate of controlling the petroleum sector which is key to the country’s economic performance," Juma said. 

She blamed the ongoing countrywide shortage that has seen a litre of petrol retail at a high of Sh300, more than double the set price on hoarding by oil marketers. 

"Private dealers are not loyal and can no longer be trusted. We are going to ensure Nock meets the required quota. We are looking at how to develop a national reserve to be managed by the agency," Juma told a media briefing on Thursday in Nairobi.

She vowed to act on marketers and retailers breaching set regulations in the petroleum sub-sector. 

''The country has enough fuel capacity to last the next 18 days. The current crisis is artificial. We hope the market will correct itself in the next 72 hours as new fuel prices are read,'' Juma said.

Kenya has no strategic reserves and relies solely on oil marketers’ 21-day oil reserves required under industry regulations.

There is however a Draft Petroleum (Importation) (Quota Allocations) Regulations, 2022 published in the Kenya Gazette in February. 

The proposed law aims at giving Nock exclusive rights to import a third of all fuel products into the country, in changes aimed at protecting the cash strapped parastatal.

“The Petroleum Products Quota Allocation shall be imported by the National Oil Corporation of Kenya,” reads draft regulations published by the Energy and Petroleum Regulatory Authority (EPRA). 

The proposed regulations are, however, expected to be opposed by independent dealers who are currently controlling the market. 

The proposed changes, if approved, will hand Nock a lifeline at a time growing losses have hurt efforts to keep pace with competition from the well-funded multinationals like TotalEnergies, Rubis and Vivo Energy.

In February, the corporation's chief executive Gideon Morintat told the Star that it was pushing for a Sh13.5 billion bailout from the National Treasury to pay bank loans and meet operating costs.

According to him, Sh6.6 billion will be used to pay bank loans, Sh3 billion for operating costs and a further Sh3 billion for oil exploration on Block 14T in the Rift Valley basin.

Nock owes KCB Group Sh4.82 billion and Stanbic Bank Sh1.8 billion in defaults that have in the past seen the two banks push to auction its assets.

The government's plan to reinvent the agency comes at the time the country is grappling with a fuel shortage that has seen pump prices rise to the highest levels ever. 

Ironically, the agency was formed in the 1970s ostensibly to tackle a similar scenario. 

Its formation was precipitated by the oil crises of financial year 1973/74 and 1979/80 and the subsequent supply disruptions and price hikes which resulted in the country’s fuel prices hitting an all-time high.

At the time, petroleum products accounted for over one-third of the total import bill, making it the single largest user of Kenya’s foreign exchange earnings.

WATCH: The latest videos from the Star