OIL companies in Kenya will soon be allocated stocksl according to their capacity to evacuate fuel from the main storage in Mombasa, according to proposal by the Energy Regulatory Commission.
The new formulae will be a departure from current arrangement that limits companies with a bigger evacuation capacity, mainly those with an established retail market in the country.
Under the new proposal, ERC will be look at a company’s evacuation capacity for the last three months, to determine their allocation in the pipeline.
The proposal comes at a time when Oil Marketing Companies have complained of unfair fuel storage allocation formula (ullage) in the Kenya Pipeline system, which one of the players - Vivo Energy has blamed on the fuel shortage in Nairobi and its environments.
ERC acting director (petroleum) Edward Kinyua yesterday told to the Star the proposal is already with the Energy and Petroleum ministry.
The regulator will today announce its new monthly fuel price review.
“The new proposed formula is a good thing as it will be looking at evacuation capacity. It is welcomed," said Vivo Energy communication manager Angela Munyua.
But even as ERC sets out to reallign fuel evacuation allocation, the Kenya Pipeline Company yesterday clarified that the ullage system is managed by an independent pipeline cordinator.
"Every month, the available ullage in KPC is shared among the OMC through a fromula developed, agreed and approved by the entire industry," said KPC acting managing director
Floira Okoth.
She said last Thursday KPC released 1.6 million litres of Super petrol to tbe maket and is therefore not to blame for the fuel shortage..Okoth said KPC has enough stocks of Siper petrol, Diesel and Jet fuel in Nairobi and other parts of the country.
"These stocks only move from the KPC system on order from customers who own the products," she said.
ERC said its new formula if adopted will shelter the country from fuel shortages since those with a wider retail market will be able to have adequate supplies.
Kinyua said ERC will intensify its fuel quality monitoring programme which addresses issues of price and fuel stocks, to curb hoarding.
“You find somewhere there is no fuel and someone has stock in his depot and is not selling. Such people will have their depots closed,” warned Kinyua.
He said OMCs must also ensure they have a minimum stock that can go up to 15 days which is adequate time for an oil tanker to cruise from the Gulf to Kenya, in case of a shortage at the country’s main storage.
OMCs are required to have a licensed deport and at least five operational petrol station (compulsory).
They must also prove they are trading as wholesalers in Kenya and have the capacity of selling a minimum of 15 million litres per year, to be allowed to trade in the country.
“This assures us you are able to evacuate products as they come,” Kinyua said.
The country’s main oil terminal is Kipevu in Mombasa with a capacity of 326 million litres.
