By JOHN NJIRAINI
The Government has moved to curb runaway oil prices by settling a protracted dispute with leading marketer KenolKobil and addressing bottlenecks in the supply system.
Energy PS Patrick Nyoike accused some big oil marketers of setting prices prompting others to react and thus end up hurting consumers who have seen prices soar from an average of Sh85 two weeks ago to Sh99 by on Friday.
"Companies have no moral authority to increase prices because we have enough products in the system," he said.
In the wake of a public outcry over rising pump prices in recent weeks occasioned by ranging disputes and capacity constraints, the Government said prices should come down by at least Sh5 after it addressed deeply-rooted problems in the sector.
He said while the Government cannot impose prices controls, it was exploring other measures through which it could arrest the tendencies of marketers to increase prices arbitrarily.
Licences reinstated
KenolKobil, which controls about 20 per cent of the retail market, will have its import licences reinstated while the Kenya Pipeline Company (KPC) must release products one hour after payment of taxes.
"The maximum period it will take to get products is one hour after paying of taxes," said Mr Nyoike, adding that oil companies must reduce pump price because oil products are enough.
It used to take a minimum of four days before oil marketers could access products even after paying taxes to the Kenya Revenue Authority due to bureaucracies and rampant corruption at KPC.
Two KPC employees, among them chief technician, were sacked yesterday allegedly due to graft-related malpractices.
The ministry is also holding negotiations with Treasury to have the period in which KPC can hold products reduced from 30 days to 15 days to curb widespread price speculations in the industry, something that is always a cause for price increase.
Though Nyoike could not divulge details under what terms the standoff with KenolKobil was resolved, he said the oil marketer has signed a new contract with KPC and the Kenya Petroleum Refinery Limited (KPRL) that will allow it to start importation of oil products for the local market.
Owes KPLC
KenolKobil, which owes KPC and KPRL a staggering Sh600 million, will also pay all the outstanding dues and must abide by industry regulations like other players, which include refining crude at the refinery in Mombasa.
KenolKobil will also withdraw all the pending court cases involving KPC and KPRL.
The company had its import licences suspended in July after it refused to pay processing fees to KPRL and transportation and storage fees to KPC.
"We are starting on a clean sheet with KenolKobil. The company will start paying new tariffs," said Nyoike, who was accompanied by Government Spokesman Alfred Mutua.
This means the company, which is a major player in the local market, can henceforth start importing crude for sale in the local market.
But the PS announced a ban on random and unscheduled importations of oil products, something that he said was the cause of lack of storage capacity at the KPC owned Kenya Oil Storage Facility (KOSF).
Ultimately it means that all importation must be through the open tender system.
The Government has also given oil marketers up to December to invest in storage facilities to ease the pressure on KOSF, which handles oil products for all players numbering more than 40.
Lack of adequate storage facilities makes it impossible for KPC to pump oil products inland to Nairobi and Western Kenya.
Source: The Standard | Online Edition
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