EPRA punishes firms behind acute fuel shortage

EPRA accused oil marketers of exporting more fuel leaving little for the local market.

FILE PHOTO: A worker holds a nozzle to pump petrol into a vehicle at a fuel station in Mumbai, India, May 21, 2018. REUTERS/Francis Mascarenhas/File Photo

The fuel shortage crisis in Kenya has taken a new twist after the Energy and Petroleum Regulatory Authority (EPRA) announced measures to be taken against oil marketers behind the scarcity of the commodity.

In a statement by EPRA CEO Daniel Kiptoo, and copied to Energy CS Monica Juma, the authority said that the shortage has been worsened after some oil marketers exported more than the stipulated amount of fuel.

Kiptoo explained that the authority had gone through data spanning 4 weeks and established that some of the oil marketers were in violation of the law.

The EPRA has analyzed the daily petroleum loadings over the past 4 weeks and noted that a number of Oil Marketing Companies (OMCs) have in the period under review given priority to export loadings while the local market was left to suffer intermittent supply,” read an excerpt of the statement.

As a result, the authority has sanctioned the affected oil marketers by introducing a raft of measures that will be implemented in the next three months.

EPRA resolved to slash the capacity of the OMCs which increased their transit volumes over and above their normal quota during the supply crisis period.

The slashed capacity will be given to oil marketers who increased their local volumes without giving priority to their export volumes.

To alleviate the current fuel shortage, the government ordered all OMCs to release petroleum supplies last week.

Oil merchants blamed the shortages on a lack of understanding about the fuel subsidy that the government implemented last April to keep prices stable amid fears of stockpiling.

Delays in the payment of the subsidy to firms have driven up prices in the wholesale sector, where oil majors resell fuel to smaller independent fuel retailers, who control 40% of the market.

There is growing hesitancy to take out all your stocks to the market due to the subsidy. What if the government decides to retain prices yet the stocks you are selling were shipped in at higher costs? We are talking of monumental losses,” said a CEO of a top oil marketer who sought anonymity told Business Daily.

The wholesale market is also dry because the independents are not buying the costly fuel and their stake is huge. The shortages will not go away if the government fails to address the root cause of the problem,” he added.

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