Oil prices drop as marketers yield to public pressure

By Macharia Kamau

Motorists are finally getting a reprieve after oil marketers yielded to public pressure, and are now bringing down fuel prices. However, they warned that the reduction may not be sustainable, due to the inefficient oil distribution.

Late last week, KenolKobil reduced pump prices of its retail outlets in Nairobi's central business district by more than Sh4 to Sh97.80 for petrol, from Sh101.90. Diesel is now retailing for Sh88.80 down from Sh95. A further reduction is expected following arrival of the first consignment by State-run oil marketer National Oil Corporation (NOCK) last week. The Ministry of Energy is also in the process of putting in place measures that would allow Government cap fuel prices.

KenolKobil had early last week said it would reduce its retail prices, but added the condition of the local oil distribution systems could not allow the industry to sustain the low pricing. It was the first major marketer to drop its prices and other companies are expected to follow suite.

NOCK brought its first consignment the fuel that it is importing through the 30 per cent quota. The 25,000 metric tonnes of diesel that landed at the Kipevu Oil Terminal a week ago is expected to play a part in further reduction of fuel prices.

Sell a proportion

NOCK, which is expected to sell a proportion of the fuel to other marketers, said the cargo was oversubscribed by over 20 per cent, due to competitive pricing of the fuel.

"We assure Kenyans that consequently, there will be a significant drop in the pump prices of diesel fuel across all NOCK stations, and hopefully, this price drop will be emulated by other oil marketers," said Sumayya Athmani, the acting managing director NOCK.

In June this year, the Ministry of Energy issued a notice giving NOCK a 30 per cent quota to import crude and diesel products. This decision was expected to stabilise prices, and check the erratic increases in fuel prices that the country has witnessed this year. This directive covers diesel, dual-purpose kerosene and crude oil. It does not currently include gasoline (super) or LPG.

Source: The Standard | Online Edition