Fuel users paid Sh1bn for ship clearance delays — documents

Kenyans on average pay Sh30 million for every vessel that docks with fuel

In Summary

•MPs seek to reduce the petroleum levy charged on super diesel and petrol from Sh5.40 to 40 cents.

•KRA is set to forgo Sh27 billion in proposed tax changes to end Kenyans' pain at the pump.

The ongoing construction work at the new Kipevu Oil Terminal at the Port of Mombasa.
The ongoing construction work at the new Kipevu Oil Terminal at the Port of Mombasa.

Kenyans are forking out millions when fueling their cars to pay for delayed clearance of crude oil at the Mombasa Port, known in the gas industry as demurrage charges.

Documents under review of the National Assembly Finance committee reveal that in the first six months of this year, taxpayers paid Sh1 billion following the delays.

On average, Kenyans pay Sh30 million for every ship that docks with fuel, amid claims owners of shipping vessels are being paid to delay.

The losses are then transferred to motorists and other fuel users for every litre they buy at the pump, putting Kenya Ports Authority and Kenya Pipeline Company on the spot.

MPs during inquiry sought that KPA fast-tracks the completion of the Kipevu Oil Terminal II to eliminate the demurrage costs.

It was also revealed that ships that dock at night are not offloaded until the next day, hence take longer at the port.

In the period covering January to February, the government paid Sh261 million after KPC and KPA personnel delayed clearing cargo.

Sh143 million was spent on the charges in the period covering February to March, Sh191 million in the period covering March to April, Sh142 million in the period to May, Sh132 million in the period to June, and Sh201 million in the period covering July.

The Energy and Petroleum Regulatory Authority approximated that about Sh100 million is lost monthly and Sh1.3 billion annually.

Kenya receives between six and nine ships every month, with MPs raising concerns some of the delays could be deliberate.

The Finance committee chaired by Gladys Wanga on Wednesday issued summons to Petroleum Cabinet Secretary John Munyes to explain the justification of the demurrage payments.

The CS was to appear before the committee on Wednesday but skipped the session.

MPs sought more time to issue a report on their review of fuel prices owing to the demurrages question which has since surfaced.

Lawmakers reasoned that it was possible to eradicate the charges if KPA and KRA personnel ensured that ships offload fuel within the set 48 hours.

Demurrage is paid to shipping lines as an incentive for every extra day they spend at the port.

“We wrote to the Ministry of Petroleum to explain these concerns to this committee. We are probing if this issue is man-made because some shipping vessels stay for even 10 days,” Wanga said.

She said it was regrettable taxpayers were paying the charges for the inefficiencies at the port, some said to be man-made.

Munyes reportedly told the committee at the last minute that he would be away and sought to appear on October 18.

“I am wondering if we don’t have any officials in the ministry who can respond to the matter. I feel they are acting in contempt of the committee. We have one week to deliver our report. This is unacceptable,” Wanga said.

MPs at the meeting said it was regrettable the committee took the matter for granted yet it is of great national importance.

“Already Kenyans are agitated by the delay. We can't delay anymore this report should be tabled before the house next week,” Siaya Woman MP Christine Ombaka said.

“The Ministry is not one person. Just because the CS is not available doesn’t mean now the Ministry is not in existence,” Samburu Woman MP Maison Leshoomo said.

Her Roysambu counterpart Waihenya Ndirangu said, “It appears that the Ministry is a one-man show. Do we have to postpone our business until the 18th just because the PS is not available?”

 “We can't hold the house because of one officer. This committee has the power to summon him to come and shed light unless he is in a conspiracy with people who are stealing from Kenyans in demurrage charges at the ministry,” he said.


Edited by Kiilu Damaris