Economy

Epra to cut imports for marketers exporting more fuel causing shortage

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Residents of Nyeri town queue for fuel at a petrol station on April 11, 2022. NMG PHOTO | JOSEPH KANYI

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Summary

  • The energy regulator said on Tuesday in a statement that their analysis of the daily petroleum loadings for the past four weeks shows that some oil marketers gave priority to export while the local market faced a shortage.
  • According to Epra, the oil marketers who increased their exports in the period under review will be allocated lower capacity for the next three import cycles.

The Energy and Petroleum Regulatory Authority (Epra) has said they will reduce import allocations for oil marketing companies (OMCs) found to have increased their exports to regional markets in the past four weeks, subjecting Kenyans to a shortage of the commodity.

The energy regulator said on Tuesday in a statement that their analysis of the daily petroleum loadings for the past four weeks shows that some oil marketers gave priority to export while the local market faced a shortage.

According to Epra, the oil marketers who increased their exports in the period under review will be allocated lower capacity for the next three import cycles.

OMCs who released more fuel into the market during the period will have their quotas increased.

“EPRA hereby recommends that in the allocation of capacity for the next 3 import cycles, key consideration shout be given to the following: Reduction of capacity share for all OMCs who increased their transit volumes over and above their normal quota during the supply crisis period,’ EPRA said in a statement.

“A corresponding increase of capacity share to all OMCs whose local volume sales increased above their normal quota during the same period.”

The marketers are said to have increased the share of fuel they sell to the neighbouring countries of Uganda, Rwanda and DR Congo to over 60 percent from the previous 40 percent of total imports to ease their cash crunch.

This has further cut supply as the neighbouring countries enjoy normalcy.

While State is blaming oil majors for the current shortage, the dealers have linked it to a lack of clarity on the fuel subsidy introduced last April to stabilise prices amid suspicion of hoarding.

Delays in the payment of subsidies to the companies by the government have pushed up prices in the wholesale market where oil majors resell fuel to the smaller independent fuel retailers, who control 40 percent of the market.

This has seen the small retailers hesitate to buy the costly fuel, with increased supply of oil majors unable to plug the deficit.

The oil majors have also been cautious to increase supply, uncertain about whether the State would compensate them for fuel not used to calculate the monthly price adjustments, which takes effect on April 15 and will stay in place for one month.

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