Oil marketing companies are hoping for bigger profit margins on fuel even as the Energy and Petroleum Regulatory Authority (Epra) commences a pivotal study on the running costs they incur to determine new costing that will be in place for the next five years.
Epra in October last year awarded Kurrent Technologies the tender to undertake the Cost of Service Study in the Supply of Petroleum Products (COSSOP), which will be the country’s second, for Sh29.3 million.
The consultant has now begun engaging key industry stakeholders to gather their input on their prudently incurred costs amid a shifting local and global oil landscape.
The latest study will reveal the changes that have taken place in the fuel supply chain over the last five years starting from importation of the commodity, its transportation, and eventual distribution at the pump.
Epra carried out the first COSSOP in 2018, which was implemented in December of that year. Recommendations from the study saw the regulator hand oil marketing companies (OMCs) a profit margin of Sh12.39 per litre of petrol, Sh12.36 on diesel, and Sh12.36 on kerosene.
Over the years, the OMCs have been pushing for a review of the margin, arguing that while prices of fuel have shot past the Sh200 mark per litre, their margins have remained constant despite a rise in costs.
The oil sector’s lobby, the Petroleum Institute of East Africa, could not be reached on time to provide input on the new study.
But other groups within the sector have already started preparing their input to inform the new COSSOP, with a focus on pushing for an upward review of the margins to reflect current costs.
“We are working on recommendations (on new margins) now as we speak,” Martin Chomba, chairman of the Petroleum Outlets Association of Kenya, said on Monday.
