Lower oil prices, PS directs firms

• Inspection fee paid by fuel marketers to Kebs should be refunded, he orders

The government has ordered the immediate reduction of oil prices and refund of inspection money paid by oil marketers to Kenya Bureau of Standards (Kebs).

And taxpayers will now pay Sh1 billion for termination of the contract to Geo-Chem.

While suspending the petrol inspection contract by Geo-Chem through a confidential letter dated March 17, Industrialisation Permanent Secretary John Lonyangapuo called for maintenance of the status quo as agreed in the meeting held on March 15 until further notice.

He said the consultative meeting that was held on March 15 between the Petroleum Institute of East Africa, Kebs and the Public Procurement Oversight Authority discussed the problems arising from the contract awarded to Geo-Chem by Kebs to undertake inspection of petroleum products imported into the country.

The letter reveals that the procurement process used to award Geo-Chem the contract was fIawed.

He said the Government, through Kebs, will carry out the inspection of quality and quantity of all petroleum products imported into the country.

He said strict procurement procedures should be followed if the services have to be tendered and that a technical committee comprising experts be constituted to review the petroleum inspection programme, especially the pricing to be charged by Kebs.

“All the monies already paid to Kebs for inspection by the oil industry players prior to March 1, 2010, be refunded accordingly and government immediately directs all the players in the petroleum industry to ensure that pump prices revert to normal,” the letter says.

Went up

Fuel prices went up after the Customs Department began collecting petroleum importation inspection fees on behalf of Kebs last Monday.

Kebs stoked controversy in July 2009 after it contracted Geo-Chem to undertake inspection of imported crude oil and refined fuel despite the public procurement administrative review board having annulled the tender.

Bakri International, Galana Oil, Hashi Energy, Mogas International, Muloil Ltd, Sovereign Oil Ltd and Oil City Services, among others, had moved to the High Court and filed a suit against the qualities body seeking cancellation of the contract.