Blog Archive

Monday, May 09, 2011

Petrol Shortages in Kenya - May 2011 Part 4

5 May 2011: kiraitu murungi [Kenya's Minister of Energy] said there were 67mn liters of PMS [Premium Motor Spirit aka Super Petrol], 99mn liters of diesel [AGO] and 102mn liters of Kerosene in KPC's system. [Source: Nation Business Reporter per the Press Briefing on 5 May 2011]

9 May 2011: MoE floats an "Emergency" Tender for the supply of 47 million liters of petrol through OTS [35,000 MT] for delivery between 17-21 May.

So the questions/observations are as follows:
  • Why float an Emergency Tender if there is plenty of petrol in the system? Kenya uses 3mn liters of PMS then 67/3 = 22 days of petrol.
  • Emergency Tenders tend to be pricier since the 'urgency' means paying higher rates for a ship or cargo than under normal circumstances.
  • If the purchase/delivered price uses the May PLATT average (higher than April PLATT average price) then Kenyans are in for another price hike come 15 May 2011 for petrol.
  • Which firms products [especially PMS] are clogging the KPC system?
  • Why haven't these firms been forced to evacuate the products from KPC tanks?
  • Will these firms be allowed to bid for the Emergency Tender?
  • What if these firms bid, win & supply the products ALREADY in the KPC tanks?
Oil marketers have faulted the process, saying, it would not be competitive. "Since the supply is an emergency, there is little time to get a competitive bid,” a leading oil marketer told the Nation.Others warned that this could push up the prices further.

However, KPC has maintained it was wet with the product, meaning, it had enough stocks of the popular super petrol.

MoE controls ullage [storage] at KPC & the OTS tender process which means they have the inside track of who imports what & when. KPC is 100% owned by GoK & controlled by MoE.

With private imports by individual marketers restricted, all players must patiently wait to get supplies from the next OTS tender, even when their customers want more.

The only exception are the rare cases where politically-favoured importers are allowed to bring in product from outside the system.

Access to the only pipeline is regulated by an ullage committee under the oversight of the ministry of Energy.

Another interesting article from The Standard

Kenol(Kobil) General Manager David Ohana confirmed marketers do not know the source of the consignment held in KPC facilities, which he says, had denied them chance to offload their imports currently in the high seas and attracting demurrage of US$40,000 (Sh3.3 million) daily.

So legitimate imports cannot be off-loaded while the tanks are full yet there is a 'shortage'???

For instance, it emerged on Wednesday that of the 19 million litres of petrol sitting in KPC tanks as wananchi were suffering, the largest proportion belonged to trading companies with no marketing outlets.

They were Addax Kenya Ltd, Royal Energy Ltd , Gulf Oil and an importer who signed as “one time vendor”.

How these small players came to hold so much petrol within KPC’s systems at a time when the rest of the industry was dry remains a puzzle.

The Ministry of Energy co-ordinates the so-called ullage committee that decides how to allocate space in KPC storage facilities to oil companies.


Anonymous said...

So the MInister says one thing and his ministry does another? Why won't all the non-briefcase oil marketers do a joint press conference and say what's going on, unless they would like to branded as rips off as Kiraitu is? where will the emergency import be offloaded if the tanks are so full that ships are docked at sea with nowhere to offload? This is a circus of the highest order. Kiraitu should go home again. He's an embarrassment to the human folk!

coldtusker said...

@anon - Not as simple.

The legitimate OMCs are afraid of MoE since the MoE has a lot of powers over them in many matters including licensing.

KenolKobil which took on KPRL over its inefficiencies had their license to import fuel withdrawn & was in danger of losing other licenses as well.

Game Theory - Many OMCs looked on at KK but wanted KK to fall. Turned out KK ended up stronger as a result!

KPRL tanks will be used to store the petrol. These are empty following the shutdown at the refinery.

Sam Kiranga said...

Do you work for a petroleum company or a transportation firm? It's got to be one of the two.


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