Fuel shortage looms as stocks held over inspection fee

Oil marketers were on Tuesday desperately groping for reprieve as Kenya Revenue Authority officials moved in to collect inspection fees before releasing fuel.

On a day that stocks were said to be running low, marketers could not access oil products in Mombasa before paying an inspection charge they feel is punitive.

Industrialisation Permanent Secretary John Lonyangapuo, who intervened as fuel companies rose against the new order, has called for an urgent meeting on Monday to deliberate on the matter.

“We don’t want Kenyans to be held at ransom by a dispute between oil importers and Kebs. I have said the process has to be stopped and written a letter to the parties to come here to sort out the matter once and for all,” he said.

Kebs in July 2009 contracted Geo Chem Middle East of India to carry out quality and quantity inspection of crude oil and imported refined fuel despite Public Procurement Administrative Review Board having annulled the tender.

It has also Mandated KRA to collect the money.

Officials of oil firms yesterday said pump prices would rise by a high margin unless the government acts decisively on fees collection of 0.675 per cent of cost, insurance and freight (CIF) on crude oil and imported refined fuel.

“Gulf Energy imported an industry consignment of petrol and the company has been forced to issue supplementary invoices to cover inspection fees of Kebs and Geo Chem,” said senior officials who asked not be named.

Gulf said in a letter to marketers that any delay in paying the fees may precipitate a shortage of petrol in the local market as the product cannot be transferred as other taxes cannot be paid to KRA before inspection fees.

The firm said it paid import declaration fee for a cargo of crude oil on February 26 but KRA declined to clear it without inspection fees.

KRA started collecting inspection fees from March 1.

Industry players estimate the Geo Chem contract is skewed such that they would pay Sh2.5 billion annually for inspection, up from Sh8 million they paid to SGS and Intertek and other private testing companies.