Small oil marketers say new oil import deal will improve supply
A fuel attendant holding a fuel pump at the filling station along Kimathi Street. Small player in the oil market have backed the state to state oil import deal.
Small players in the oil marketing sector have supported plans by the government to import fuel directly from suppliers in producing countries, saying it will ensure steady supply of the commodity besides stabilising the demand of the dollar in the market.
The government signed an import deal two weeks ago with Saudi Aramco to supply Kenya with diesel and super for the next six months, while Abu Dhabi National Oil Company will deliver three cargoes of super petrol every month with imports set to begin on April 1. However, oil marketers have opposed the plan and gone to court seeking an order to block it.
But non-franchised dealers have supported the government saying the deal would also level the playing field in the sector.
Under the United Energy Petroleum Association (UNEPEA), the dealers said the Energy and Petroleum Regulatory Authority (Epra) should introduce a wholesale price to protect them from exploitation by the large oil marketing companies (OMCs). UNEPEA chairperson Irene Kimathi said despite a formula for calculating wholesale prices for various fuel products being in place, it was not adhered to. Epra announces retail fuel prices on 14th of every month, but does not disclose wholesale prices.
“When the prices are announced on 14th, there is the wholesale cap which has never been enforced. We buy the products at near retail prices and end up with very small margins, making business untenable because we operate at huge losses. This has forced some of us to close shop,” Ms Kimathi said yesterday in an interview in Meru.
“In an environment where there are few importers, there is no competition, which leaves us at the mercy of a few wholesalers,” she said.
Ms Kimathi said that the government should also consider the grievances of the OMCs in opposing the oil import deal.
“The OMCs should be supported in such a way that they don’t lose out on their businesses or cause disruptions in the oil sector as we all strive to survive the harsh business environment,” she said.
Dr Mbaabu Muguna, the association’s vice chairperson, said over the past three years, small oil marketers had faced hardships, making it difficult for them to stay afloat.
