Fresh dispute on oil tender rocks ministry

The government has ordered an emergency supply of super petrol despite the Kenya Pipeline Company (KPC) insisting it has sufficient stocks.

Industry players on Sunday told the Nation the tender for 35,000 tonnes of petrol will be awarded on Tuesday with a delivery deadline of May 17.

The supplies will not be offloaded at the usual Kipevu Oil Storage Facility, but the refinery. This is because the facility is full, raising questions on the merit of importing the petrol.

Oil marketers have faulted the process, saying, it would not be competitive.

“Since the supply is an emergency, there is little time to get a competitive bid,” a leading oil marketer told the Nation.

Others warned that this could push up the prices further.

“Suspicions are rising that a cartel could be out to fleece Kenyans,” a marketer said, adding that those involved wanted to raise campaign funds for 2012 elections.

Efforts to get a comment from Energy Minister Kiraitu Murungi on Sunday were fruitless.

On Friday, Energy permanent secretary Patrick Nyoike met with the chief executive officers of oil marketers and reportedly floated two options the government was considering to guarantee fuel availability at stable prices.

First, Mr Nyoike said the refinery could be modernised to handle the increasing demand.

Second, Mr Nyoike proposed expanding the mandate of the refinery so that it could refine and sell oil products on its own.

Oil marketers favour the latter, arguing that it would bring down prices. But this could place the refinery in the hands of the very same oil marketers, hurting consumers even more.

At present, oil marketers must process 30 per cent of their fuel at the refinery, which handles imports under the Open Tender System (OTS).

This debate follows last week’s fuel shortage amid allegations that oil companies were deliberately delaying to pick up diesel and kerosene from KPC to cash in on recent reductions of duties and taxes.

As a result, the Kenya Pipeline Company’s storage tanks were literally clogged with diesel, leaving little space for petrol.

Deputy Prime Minister Uhuru Kenya, who is also the minister for Finance Minister decreased duty on diesel and kerosene on April 18 to check the rising cost of living.

Kerosene is used largely by the urban poor, while diesel fuels the manufacturing sector.

Excise duty on kerosene and diesel was reduced by 30 per cent and 20 per cent, respectively, the maximum that Treasury is allowed by law.