Price war: The truth about fuel shortage

Oil companies may be hoarding fuel to create an artificial shortage of the essential commodity, our investigations revealed on Sunday.

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The Nation learnt that the companies had deliberately refused to collect more supplies at their respective depots in Nairobi for onward transmission to the petrol stations, despite the availability of the commodity in plenty.

Multiple interviews with industry insiders showed that marketers are focusing the sale of the fuel to neighbouring countries within the region to create an artificial shortage for them to be allowed to increase prices.

The prices in neighbouring countries give the companies higher profits than in Kenya where the Government is spearheading a move to establish a price control mechanism, the Nation learnt.

The proposal, industry insiders say, has unsettled petrol companies who prefer to set the prices. The Government has published a proposed formula for determining prices following a reluctance by petrol companies to reduce prices in line with global prices, which have fallen from an all-time high of $147 a barrel to about $37 currently.

The Government then invited petrol companies and other industry players to give their input before the final proposal is taken to Parliament for passage into law.

The Nation also established that no fuel shortages have been reported in Uganda, Southern Sudan or Rwanda
Documents in our possession indicate that about 4.2 million litres of premium petrol had been pumped to seven petroleum companies within the last four days.

Kenya Pipeline Company also pumped 261,000 of regular, 563,000 litres of kerosine, 6.1 million litres of diesel, 1.3 million and 5.8 million litres of Jet fuel to Moi and Jomo Kenyatta International airports, respectively, during this period.

By Sunday evening, KPC received an additional 4.2 million litres of premium petrol and 15 million litres of diesel from their Mombasa depot to be distributed to various parts of the country, according to the document.

The seven companies include Chevron, OilLybia, Kobil, Shell, Total, Nock, and Oilcom. The details emerged on a day that marketers, through their umbrella body the Petroleum Institute of East Africa, blamed the Kenya Petroleum Refineries, KPC, Kenya Revenue Authority, importers and Kenya Power and Lighting Corporation for the “shortages.”

Crude oil

The inability by the refinery to convert crude oil into sufficient quantities especially of premium gasoline was frustrating, said Petroleum Institute of East Africa general manager George Wachira.

“With a refinery in an urgent need of an upgrade, this will continue to be an expensive problem both to the economy and the consumer,” said Mr Wachira in an article published in the Sunday Nation.

“Power fluctuations and outages have also consistently interfered with the ability of the refinery to meet its production targets.”

When the Nation called him to respond to reports that petrol companies were creating an artificial shortage, his phone went unanswered and neither did he respond to the inquiries sent through the text message service.