Four oil marketing companies (OMCs) are being investigated for hoarding huge volumes of excess petroleum stocks for export despite inconsistent supplies in some sectors of the domestic market.
OMCs were retaining 34 million litres of extra transit volumes within the Kenya Pipeline Company (KPC) system early this week, according to a Petroleum Ministry audit, even as users in sections of the country, particularly western Kenya and the North Rift experienced irregular supply.
“This is completely unacceptable,” Petroleum Principal Secretary Andrew Kamau said in a protest letter to the marketers following the audit. He ordered the OMCs holding excess stocks of export products to re-route a total of 31.9 million litres to the local market.
According to an audit, Asharami had the biggest amount of surplus export stockpiles as of Tuesday, with the State ordering the business to sell up to 13.19 million litres of its consignment locally.
Total Kenya was also discovered with large quantities of excess petroleum inventories for export and was ordered to sell 2.4 million gallons in the domestic market.
Lake Oil and Fossil Fuels were also discovered with considerable quantities of excess export product and were instructed to redirect two million and 1.53 million litres, respectively, to the local market.
“This is, therefore, to ask you to redirect your respective volumes to the local market by close of business today (Tuesday) failure to which we shall take action… for sellers any product declared as local in excess of the transit volume of 40 per cent shall not be allowed to participate as a seller in the upcoming tenders. Furthermore, the equivalent of their respective ullage shall be reallocated to those selling to the local market,” Kamau told the marketers.
The disclosures cast a focus on the four companies’ leaders just two weeks after their counterpart, Rubis Energy’s Jean-Christian Bergerone, was chastised by the state for allegedly aiding a fuel crisis through stockpiling and increased exports.
Debola Adesanya leads Asharami, Eric Fanchini leads Total Kenya, Aman Kurji leads Fossil Fuels and Nagib Hussein leads Lake Oil.
Other OMCs were found to have large quantities of excess supplies for export, according to the audit. Starbex International has 708,000 litres, City Oil (K) Petroleum has 890,000, Torch Energy has 752,000, and Galana Oil Kenya has 708,000 litres (694,000).
“For buyers, their excess volume declared at transit will be reallocated in the next ullage allocation and their subsistent cargo firmed up will be reallocated accordingly. You have been granted a window of up to 6pm this evening. Please expedite,” Kamau further said in his letter copied to Energy Cabinet Secretary Monica Juma, Energy and Petroleum Regulatory Authority (Epra) and KPC.
The shortage of petroleum products has lately struck western parts of the country owing to a supply dispute between giant oil marketers and their smaller competitors.
The shortage was reported in Kisumu, Kakamega, Busia, Migori and Homa Bay.
Large oil marketers, beset by high importation expenses due to surging global commodity prices, have opted to focus on their own franchised shops, a blow to independent oil marketers who have relied on them for inventories for years, according to market enquiries.
The Petroleum Outlets Association of Kenya (POAK), an industry organization representing hundreds of independent oil dealers, stated Wednesday that multinationals had restricted supply, raising the price of what they can spare for local oil dealers.
Epra was accused by the lobby of failing to carry out its responsibility of determining stock volumes and price.
“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.
The Petroleum Act of 2019 requires Epra to set maximum wholesale and retail prices in order to maintain market price stability.