Kenya brokers final deal with oil marketers to end fuel shortage

The Oil Marketing Companies (OMCs) have appeared less hawkish over fuel supply in Kenya following the government’s announcement that it would directly import oil from the United Arab Emirates (UAE) to end fuel shortage.

In a meeting Wednesday with top government officials from Energy Ministry, OMC bosses agreed they will replenish non-franchised fuel dealers with 20 million litres of the commodity in what would see an end to the biting fuel shortage.

 “We have agreed that in order to correct the fuel supply hitches that have affected the country for the past few weeks, 20 million litres be made available to non-franchised petroleum retailers who now account for 68 per cent of the country’s retail network,” noted Petroleum Outlets Association of Kenya (POAK) Chairman Martin Chomba.

The deal includes among others, selling the commodity at a reasonable price in line with the government’s fuel subsidy.

“OMCs have agreed to sell fuel to the independents at a reasonable price. We are confident that the above measures are sure to set the fuel supply system to recovery and eventually restore normalcy.”

In the first incident of fuel shortage which lasted for a month, OMC were hoarding petrol and diesel over a Ksh.13 billion debt the government had owed them.

The debt was settled, but the shortage continued until April 14 when the Energy Petroleum and Regulatory Authority (EPRA) reviewed pump prices upwards.

The review saw fuel in the country skyrocket to an all-time record high of seven percent for a litre of Super Petrol to retail at Ksh.144.62, Diesel at Ksh.125.50 and Kerosine at Ksh.113.44.

Despite the review, however, the government has pointed an accusing finger at OMCs that they were only supplying fuel stations that they own on the grounds that they will incur losses should they sell to other retailers as a result of the government fuel subsidy.

They have also been accused of diverting their product for export beyond the recommended ratios, leaving the local market starved of fuel.

According to the Ministry of Energy, Asharami, one of the oil marketers held the highest stock at 13.2 million litres ahead of Total Kenya, Lake Oil Limited and Fossil Fuels Limited.

Other marketers flagged for the excess capacities included Oryx Energy, Stabex international, Galana Oil, Hass Energy and City Oil Petroleum Limited.

Petroleum Principal Secretary Andrew Kamau warned OMC bosses with excess transit supplies that they risk being blacklisted from the open tender system (OTS) used in the procurement of fuel imports by marketers.

Lawrence Baraza

Lawrence Baraza is a prolific writer with competencies in Digital Media, Print, and Broadcast. Baraza is also a Communication Practitioner currently spearheading Digital content on Metropol TV's Digital Desk.

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