Kiraitu: Energy ministry 'misled' over oil levy deal

The dispute over oil inspection fees has taken a new twist with the Ministry of Energy accusing its Industrialisation counterpart of misleading it into approving the deal.

Energy minister Kiraitu Murungi said his ministry was made to believe the rise in pump prices would not exceed 25 cents. But as of Friday, oil companies had increased prices by between Sh3 and Sh4 while others were hoarding the commodity.

“The matter is domiciled at the Industrialisation ministry and we expect they will call all stakeholders to determine who is cheating,” said Mr Murungi.

The Industrialisation ministry is scheduled to hold a meeting later on Monday, after which it will issue a statement.

Price caps

The Energy minister said the government will be re-looking at the price caps on oil companies despite the National Economic and Social Council – the body that advises the government on key policy matters – rejecting the same last year.

Speaking on the sidelines of a geothermal workshop in Nairobi on Monday, Mr Murungi said the involvement of the Kenya Bureau of Standards (Kebs) was only for reasons of having an independent inspector.

“The impression that we were given was that the rise in cost of oil would be marginal. We were surprised that oil companies are charging in then upwards of Sh4 instead of the agreed 25 cents as a result of the inspection levy,” he said.

“We think somebody is taking advantage of the situation,” he added.

Attempts by the government to re-introduce price controls last year did not receive the backing of the National Economic and Social Council which argued that such a move had the potential to disrupt the economy.

The minister however said the move was popular with most Kenyans and his ministry would again review it.

Cost of inspection

The current standoff follows a government decision to award an Indian firm Geo Chem Middle East a contract to inspect imported fuel cargo. As a result, the cost of inspection has jumped by almost 30,000 per cent from Sh7 million for 2008 imports to an expected Sh2 billion a year.

The Indian firm would pocket the lion’s share of the deal with Kebs expected to receive a commission of 0.2 per cent. The fact that Kebs ignored the nullification of the tender to Geo Chem by the Public Procurement Administrative Review Board after an appeal by another bidder SGS is yet another question that remains unanswered. It also raises more questions about the powers of the Public Procurement Authority.

The deal could be yet another money-minting scheme to enrich certain well-connected individuals in the government and at the standards agency.

And on Monday, the Ministry of Energy threw back the ball to the Industrialisation ministry as the deal begins to generate heat among stakeholders and the ordinary consumer who is beginning to feel the effect of the deal.