Epra on the spot as a new wave of fuel shortage hits
A man barricades the entrance to a petrol station on April 25, 2022 in Iten, Elgeyo Marakwet County, using a barrier tape to warn motorists that there is no fuel. Most petrol station in the town experienced a shortage of the commodity.
What you need to know:
- A scarcity of petroleum products has hit western parts of the country.
- Market inquiries revealed that large oil marketers have opted to focus on their own franchised outlets.
A new wave of fuel shortages has hit parts of the country amid a tussle between large oil marketers and their smaller rivals over supplies.
Market inquiries revealed that large oil marketers — hit by the high importation costs due to soaring global prices of the commodity — have opted to focus on their own franchised outlets, dealing a blow to independent oil marketers who have over the years depended on them for stocks.
The large oil marketers have cut their stock purchases through the Open Tender System (OTS) amid liquidity challenges.
This means the multinationals are now only prioritising supplying their franchised outlets as opposed to the independent dealers, who make about 30 percent of the country’s entire fuel retail stations network.
The Petroleum Outlets Association of Kenya (POAK), an industry lobby for dozens of independent oil dealers, yesterday confirmed supply cuts by the multinationals that have also raised the price of the little they can spare for the small oil dealers.
The lobby accused the Energy and Petroleum Regulatory Authority (Epra) of failing to enforce its mandate of setting stock volumes and pricing.
“Although the authority is supposed to issue a maximum wholesale price as well to protect small retailers, this has not been happening [which] has left us exposed to exploitation,” said POAK in a statement.
“At times, many of us have had to buy fuel at pump prices,” said the lobby.
Epra is required by the Petroleum Act of 2019 to set both maximum wholesale and retail prices to ensure price stability in the market.
“The cabinet secretary may, on the recommendation of the authority, make regulations determining the maximum wholesale and retail prices of petroleum and petroleum products,” says the Act.
The tussle between the traders has left several outlets, especially in the western parts of the country, without stocks.
The affected regions have been hit by fuel shortages because the market is dominated by small dealers.
The large multinationals deserted the area decades ago, hit by the dumping of the export products meant for Uganda and the Great Lakes region.
The shortage has also seen some rogue dealers divert fuel to the black market where the product is being sold at prices as high as Sh300 per litre, more than double the retail price ceilings set by Epra this month.
This comes barely a week after acting Petroleum Cabinet Secretary Monica Juma announced a government victory over rogue oil marketing companies it had accused of deliberately causing the fuel shortage.
This followed the summoning of the executives of ten oil marketing firms to record statements at the Directorate of Criminal Investigations (DCI) over their alleged role in the fuel shortage.
“By yesterday April 18, the ministry can confirm that majority of petroleum retail stations across the country were carrying out business as normal. The long queues witnessed in the past two weeks were gone, and normalcy in petroleum supplies was restored,” the CS had said.
The firms were accused of withholding old fuel stocks to sell them at higher prices after the monthly prices review and diverting fuel meant for export beyond the recommended ratios, leaving the local market starved of the product.
Oil marketing companies are often recommended to sell at least 60 percent of their fuel products locally.
Both Epra and Petroleum Principal Secretary Andrew Kamau could not be reached for comment on the government’s plans to resolve the fresh crisis.
However, an oil executive who was reached by the Nation said they had been gagged from speaking to the press on the back of the DCI summons and could not give any information regarding the situation.
“We have been barred from talking to the media and our phones are being monitored. But we can speak in the future about what is really happening once this [fuel shortage crisis] is over,” said the executive.
