NAIROBI, Kenya, Apr, 15 – A fuel crisis? What fuel crisis?
This is the discordance that millions of Kenyans have been subjected to for weeks as the government and the Oil Marketing Companies (OMCs) continued to issue conflicting information on what truly is to blame for the current fuel shortage nationwide.
As long queues, synonymous with those seen during an election season characterized Kenyan roads, with every man for himself, desperate for this now rare commodity, the ministry of Energy in a statement sought to avert a crisis, saying that the country had enough fuel and its products to best serve the nation.
Shortly after however, in anticipation that things would return back to normal, the situation seemed to worsen further as yet again, from the Kipevu Oil Terminal, Energy Cabinet Secretary Monica Juma on April 8,2022 assured the country that, “we were secure with our supplies,” – Referencing the country’s fuel stocks.
On Thursday however outside the Kawi complex, Juma sought to set the record straight, faulting a section of OMCs for what she described as textbook hoarding, in turn creating a crisis in the country.
“We have been witness to an action that has distorted the market and supply chains, created artificial shortages, caused panic and anxiety, negatively affected productivity, and in some cases caused harm to Kenyans. In essence, create energy insecurity in the country. Disturbingly, these actions have gone on in spite of repeated assurance from the ministry and other parts of Government,” said Juma.
The CS said that despite several meetings with Oil companies and distributors to address the stalemate, even further pledging to honour its financial obligations to them, the stakeholders sought to deliberately sabotage the country’s economy which is tantamount to a capital crime.
“The country had adequate stocks of petroleum and petroleum products to meet its monthly demand. We have determined that some players were hoarding the product, awaiting the “14th day of the month” price review so as to cash in on the windfall. This speculative character is not only bad faith but is insensitive to the situation that is upon Kenyans. Some players were additionally diverting cargo earmarked for local use for export into the region to further enhance their abnormal profits,” she said.
In a move to address the situation, the government has now directed entities not willing to comply with regulations to immediately vacate the market as the Energy and Petroleum Regulatory Authority (EPRA) issued several show-cause letters to OMCs that failed to meet the required minimum operational stock levels that resulted in stock-outs at their retail stations.
EPRA revealed that it was around the same period that OMCs and retail station operators were offering petroleum for sale at prices above the published maximum price in breach of section 99(1) (n) of the Petroleum Act of 2019.
As a result, the Directorate of Criminal Investigations (DCI) is conducting investigations into alleged economic sabotage claims against some of the OMCs.
“We can not accept that people that have been given responsibilities and signed to those obligations can willy-nilly decide that they can dispense them at pleasure. We can not hold the nation to ransom, it almost feels like piracy, when someone holds you in the high seas, it almost feels like this, it is not a good feeling. We cannot allow private entities or any other person to disrupt our way of life and our cherished freedoms. ” said Juma.
The Petroleum Act of 2019 imposes a fine of Sh10 million or five years in jail for dealers who sell fuel above the price set by EPRA.
Those found guilty of hoarding, risk fines of not less than Sh1 million or one year in jail or both.
On Wednesday evening Rubis Kenya Managing Director and CEO Jean-Christian Bergeron was deported out of the country on accusations of economic sabotage.
Government Subsidy
The government rolled out a fuel subsidy in April 2021 in a bid to cushion consumers from the surge in the price of oil in the international markets.
According to Juma, the Ministry of Energy is, “in receipt of the full outstanding balance of this money, which will be processed to the OMCs promptly.”
As of April 14, 2022, Sh34,642,117,167.49 plus another Sh14,522,708,347.11 (A total of Sh49,164,825,514.60) has been disbursed to OMCs under the petroleum pump price stabilization framework making the pump price in Kenya the lowest in the region.
This is said to have assisted greatly efforts to stabilize prices at the pump while at the same time keeping inflation within the government’s preferred band.
Recent trends are said to have caused cash flow problems at some smaller fuel retailers, leading to supply shortages. Delays in payment of subsidies to the relevant companies is further said to have worsened the situation.
“We have received the funds from the national treasury, we are going through the administrative process, we will pay either today (Thursday) but if we are not able to meet the 3 pm deadline required from our banks we will do it by Tuesday morning next week,” said Petroleum Principal Secretary Andrew Kamau who further said that,” Our responsibility is to you the Kenyans and not the oil companies.”
CS Juma meanwhile also refuted claims that the subsidy payment was being made under ‘suspicious’ conditions saying that the government has strived to conduct payments as guided by the regulatory framework.
“Even in instituting the subsidy programme, the government has been faithful and paid the required obligation upon itself to the oil marketing companies. There is no reason whatsoever to talk about speculation on sustainability… when the government decided to institute this insurance programme it is not because there was an oil price increase as we are seeing it now, it was about a vision, cushioning for the future, and unseen circumstances,” she said.
Gov’t Measures To Avert Fuel Crisis
As a medium-term intervention, the Ministry of Energy has commenced the process of ensuring that the National Oil Corporation of Kenya (National Oil) assumes its responsibility of taking up the 30 per cent import quota of petroleum products that were designed to assure continued security of supply.
National Oil has been identified as a critical arm of ensuring supply to the independent petroleum dealers, who collectively serve more than 50 per cent of the market.
Also, the Ministry has sanctioned a process of reallocating the petroleum import capacity. OMCs who sold above their normal local quota during the crisis period will benefit from additional capacity, while those who sold less will have their respective capacity reduced.
The rationalization of the petroleum import capacity sharing is aimed at creating a healthy balance between transit and local volumes, according to Juma.
“The moratorium on Transport of Fuel from Nairobi depot by fuel tankers is hereby vacated; We will privilege the movement of fuel and fuel products for the next 72 hours. Movement of fuel will be strictly in fidelity with the approved dispatch and merit order to all Oil Marketing Companies,”
All fuel retailing outlets are now expected to operate for 24 hours with police facilitating security.
Fuel supply across the country is expected to be stabilized in the next three days.
The Fuel Levy Fund
Earlier this month, the national assembly opened an inquiry into the total amount of money collected under the Fuel Levy Fund from September 202.
The debate before the floor of the house came about amidst the country’s fuel shortage.
Garissa Township MP Aden Duale said that the house would demand a detailed breakdown of reimbursement of fuel levy fund per month from September 2021 to date while demanding a list of the total number of registered OMCs, petroleum dealers, and small oil dealers, their network distribution across the country and percentage shares of the market across the country.
The measure taken by the government through the assistance of the fund was meant to cushion Kenyans from the effects of rising fuel prices.
The petroleum development levy was increased from Sh0.40 to Sh5.40 a liter in July 2022.
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