Economy

State accuses Rubis Energy, oil lobby of plotting artificial shortage

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Rubis Gigiri, Nairobi. FILE PHOTO | NMG

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Summary

  • The controversy over the importation of some 30,000 tonnes of petrol into the country over the festive season has escalated, with the State now accusing Rubis Energy and an oil marketers’ lobby of seeking to create an artificial shortage.
  • Rubis Energy and Omak said that the scheduling of the vessel delayed other ships that had been lined up to offload fuel and also led to an additional Sh100 million in demurrage costs -- waiting fees for delayed ships.
  • Rubis Energy is the third-largest player with a market share of 7.42 percent after Total Energies ( 18.17 percent) and Vivo (21.17 percent).

The controversy over the importation of some 30,000 tonnes of petrol into the country over the festive season has escalated, with the State now accusing Rubis Energy and an oil marketers’ lobby of seeking to create an artificial shortage.

Rubis Energy CEO Christian Bergeron and the Oil Marketers Association of Kenya (Omak) chairman Abdi Salaad last month wrote a protest letter to the Petroleum Ministry and the Energy and Petroleum Regulatory Authority (Epra) saying that importation and offloading of cargo was illegal having been done outside the Open Tender System (OTS).

But Principal Secretary for Petroleum Andrew Kamau dismissed their claims, saying they made the allegations in a bid to create an artificial shortage and trigger a security scare as motorists scampered for the limited supply of super, enough to last the anticipated outage.

“We are therefore surprised that even after attending the Vessel Scheduling Meeting (VSM) you chose to go public alleging that this was a private cargo/illegal cargo. This kind of insincerity is not only unfair but unacceptable,” Mr Kamau said in the letter seen by the Business Daily.

“You alluded that the country was to face a stock out, which is dangerous and would cause panic buying and cause an artificial shortage.”

VSM are meetings where industry players and the regulator plan how different ships ferrying petroleum products are lined up at the port and allowed to discharge their cargo.

Gulf Energy imported the 37.5 million litres of super petrol aboard vessel MT Jag Prarena.

The ministry says players had agreed on an emergency stock to avoid supply hitches due to increased demand over the Christmas and New Year festivities.

Rubis Energy and Omak said that the scheduling of the vessel delayed other ships that had been lined up to offload fuel and also led to an additional Sh100 million in demurrage costs -- waiting fees for delayed ships.

Rubis Energy is the third-largest player with a market share of 7.42 percent after Total Energies ( 18.17 percent) and Vivo (21.17 percent).

Minutes of a Zoom meeting held on November 30, 2021 show that Rubis Energy attended the session where importation of the emergency stock of super petrol was part of the agenda.

The letter is also copied to Petroleum Secretary John Munyes, Epra, Kenya Pipeline Company, the Director of Criminal Investigations and the Ethics and Anti-Corruption Commission.

Rubis Energy had said that importation of super petrol contravened the terms and conditions of the OTS, a position that mirrored that of Omak.

“We therefore wish to express our dissatisfaction in the way the import was planned to give undue advantage to a few OMCs (oil marketing companies) which is contrary to the OTS terms and conditions,” Mr Bergerone said in the protest letter.

Kenya Pipeline Company, the State agency in charge of storing and distributing fuel, had last month warned of an erratic supply of super petrol in Nairobi and western Kenya due to a spike in demand over the festive period and power-related challenges on all its main lines.

Mr Kamau defended the decision to import the cargo, saying it was meant to avoid a similar incident in 2013 when an OMC tasked with importing jet fuel failed to ship in the product, a move that exposed the country’s air transport sector.

“The interest of the Kenyan people come first. It therefore requires a high degree of soberness to manage the oil industry today,” Mr Kamau added in the letter.

The Petroleum Act of 2009 outlaws private imports for refined petroleum products into the country and gives powers to the Ministry of Petroleum and Epra to oversee the importation of petroleum products through the OTS.

The system allows the lowest bidder on any given product to import on behalf of all the other oil marketing companies.

The tiff pitting the ministry on one side against the French-owned Rubis Energy and Omak comes on the back of an industry meeting held last month where Total Energies, Vivo, Ola and Rubis Energy had reportedly requested additional stocks to meet a spike in demand during the festivities.

The letter looks set to put Rubis and Omak on a collision course with the State ahead of a planned industry meeting set for Tuesday and Wednesday next week where a review of the current OTS is top on the agenda.

“The ministry has scheduled a two days’ workshop for CEOs to be held on 25th to 26th January 2022 to review the current status of the Open Tender System (OTS) terms and conditions. This is therefore to invite you for this meeting,” Mr Kamau said in the letter.