A dispute is simmering between Vivo Energy, which runs Shell petrol stations in Kenya and small firms who are members of the Oil Marketers Association of Kenya over allocation of stocks.
Kenya’s Ministry of Energy issued a special tender for import of petrol in February to address supply shortfalls after Vivo Energy requested an advance of 4,000 cubic metres for its outlets.
Galana Oil was then awarded a tender to import 58,000 metric tonnes of petrol for delivery from March 5 to 7 to Mombasa.
“This cargo has been shared to accommodate this request,” said the Ministry of Energy in a letter sent on March 3, to Galana’s managing director George Kahira.
Other marketers protested the sharing of the cargo, arguing that it should have been shared equally based on prevailing ullage (storage space) formula to help firms meet their supply requirements.
“We were surprised that Vivo Energy was given 4,750 cubic metres additional petrol allocation over and above their share of 10,780 cubic metres,” David Ohana, chairman of the oil industry supply co-ordination committee said in a March 4 letter to Energy and Petroleum Cabinet Secretary Davis Chirchir.
Vivo’s managing mirector Polycarp Igathe, however, denied the claims of favouritism, saying the company’s application for extra allocation was justified to address the shortage.
Product shortage
He said Vivo raised concern over a looming product shortage at a meeting with the Ministry of Energy and members of the industry supply committee on February 24.
“The action taken by the Ministry of Energy and Petroleum averted a massive consumer stock out. It was indeed proactive, transparent and patriotic,” Mr Igathe.
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