KenolKobil risks loss of licences, warns ERC

KenolKobil has 14 days to show cause why its import licences should not be revoked for failing to process crude oil at Mombasa based refinery.

Energy Regulatory Commission (ERC) said terms of business licence numbers 00315 and 00316 of Kenya Oil Company Ltd (Kenol) and Kobil Petroleum Ltd (Kobil) respectively have been breached.

Stopped processing crude

Director general Kaburu Mwirichia said the permits were issued under Energy Act of 2006 for import, export and wholesale of petroleum products except liquefied petroleum gas.

He said in a letter sent to KenolKobil that the commission had been advised by Kenya Petroleum Refineries Ltd that they stopped processing crude oil for the marketer on July 13, 2010.

“In accordance with section 85 of Energy Act, you have 14 days from date of service of this letter to show cause why above licences should not be revoked,” said the letter sent to oil firm’s managing director Jacob Segman.

KenolKobil Ltd confirmed that the commission had written to its chief executive officer requesting clarification on the dispute with the refinery within 14 days with effect from August 17th 2010.

In a statement on Monday, the firm said it has asked its external legal officer to do so within the stipulated time.

“To correct and put the facts straight, the dispute between KenolKobil and KPRL goes back to early 2006 when, KenolKobil declared a dispute in line with dispute resolution mechanism provided in the processing agreement,” said the statement.