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How Cartels Are Keeping Fuel Prices High In Kenya While Global Prices Have Dropped Drastically

[IMAGE/ COURTESY]

The current fuel prices in Kenya are the highest in a period of 12 years, since May 2008 when the prices averaged 1.59 USD/Liter (Ksh168/ litre according to the current exchange rate).

On the other hand, the global oil prices are on an 18-year low, raising questions as to why the prices are still high in Kenya.

Brent crude fell to 22.58 US dollars per barrel on Monday matching the 2002 price while the price of crude oil in the US West Texas Intermediate fell below 20 US dollars per barrel, the lowest in 18 years.

This has been as a result of the global pandemic of Coronavirus (COVID-19) and the price wars between Saudi Arabia and Russia that has seen the former double production and flood the market.

Read: KPA Employee In Ksh2.7 Billion Scandal Under Probe Over Ksh90 Million Deposit

An independent investigation by Kahawa Tungu shows that the prices are controlled by local cartels deemed to be very dangerous to be challenged by any marketer.

This writer learns that Vessel K08 of March pricing has already discharged while k07 was deliberately delayed with February plates average to benefit from the falling oil prices, despite having been loaded on March 6.

Also, the Kenya Pipeline Company (KPC) has rejected a petrol cargo of 108,203 cubic metres on vessel MT Ocean Tiara, on grounds that the Final Boiling Point is higher than the recommended.

Read: Moi Company Now Linked to KPA Multi-billion Scandal

“The upper limit for PMS acceptance at the point of receipt into the KPC system is 200°C to enable smooth pipeline operation and effective slop disposal. The PMS (Petrol) onboard MT OCEAN TIARA with a cargo volume of 108,203 M3 does not meet our product acceptance criteria on Final Boiling Point (FBP) using the method ASTM D86. The FBP of the cargo was 204°C, after a witness test done at the KPC PS 14 laboratory.  The purpose of this letter is to advise that KPC will not handle the vessel and therefore the importer s d arrange for the vessel to vacate the jetty immediately,” said KPC in the letter to Supplycor, the umbrella body for all oil marketers in Kenya.

The cartels who are holding the Ministry of Petroleum and Mining by the balls have ensured that all the fuel imported into the country in March is billed as if it was imported in February. The global oil prices in February were higher than in  March, meaning now the burden approximated to be Ksh2 billion is passed on to the retail buyers. The difference is estimated at Ksh21 per litre, meaning fuel prices should now be below Ksh100 mark in Kenya.

“This is why fuel is not reducing in Kenya. @MadiniKenya is allowing a March loaded cargo to be billed as February to Kenyans. March and February have price differentials of over 200 per MT. By allowing cargo to be billed Feb, this will pass a burden of almost 2B to Kenyans,” tweeted Ahmed Mohamed, a PR strategist.

 

“The Kenyan energy sector is run and controlled by powerful cartels. They are so powerful that anyone who tried to stand on their way is either send into exile of 6-feet under,” says a businessman who owns a petrol station along Outering Road, as quoted by Sokodirectory, a Kenyan business blog.

Reports indicate that any company that refuses to pick its share of expensively priced products contrary to OTS provision clauses 19.0 could be suspended by the ministry for up to six months.

In the march fuel review, Energy and Petroleum Regulatory Authority (EPRA) announced a drop in fuel prices.

EPRA decreased Super Petrol, Diesel and Kerosene prices by KSh2.00 per litre, KSh2.80 per litre and KSh7.23 per litre respectively.

In February review, Super Petrol and Diesel prices increased by Ksh2.67 and Ksh2.13, meaning the march review was a stagnation made to look like a decrease.

Global prices have dropped by over 30 per cent in the aforementioned months.

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Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. Believes in unearthing societal rots that have been hidden from the public eye.
Follow me on Twitter @FmuliKE. Email francis@kahawatungu.com

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