Oil firms warn new inspection will raise fuel cost

In a letter to Energy Permanent Secretary, Mr Patrick Nyoike, the marketers stated that the additional requirement is a duplication of efforts as such tests are already being carried out by companies accredited by Kenya Pipeline Company (KPC) as well as the Kenya Petroleum refineries Limited (KPRL).

They warn that any extra costs incurred by oil importers will be passed on to consumers.

“All associated costs of the tests are borne by the importer and included in the product cost. This quality and quantity test would be a duplication introducing additional costs that will inevitably end up being passed on to the end consumer,” said OiLibya managing director Kamel Jarnaz in a letter dated July 29th this year.

The standards body controversially contracted Geo Chem Middle East to inspect petroleum products at point of entry into the country.

Procurement marred
KEBS had single-sourced the firm after an earlier tender it had won was nullified by the Public Procurement Administrative Review Board (ARB).

Other bidders, including SGS and intertek, had raised concerns over the manner in which Geo Chem Middle East had won the job, leading the ARB to order that the process commence afresh.

According to Kebs managing director, Dr Kioko Mang’eli, the process has been initiated afresh and tender documents have been forwarded to a consultant. He says that the new process as recommended by ARB would however take up to six months.

Kebs had, however, also requested for an alternative procurement process as provided for in the Public Procurement and Disposal Act. This meant that Kebs could single source for an inspection firm.

“When one looks at the whole issue he cannot fail to see some sort of (sense of urgency in the award) of this tender to Geo-Chem Middle East. The question is why?” asked an oil marketer who did not want to be named.

In a letter dated 25th of May this year addressed to acting Interim director general of the Public Procurement Oversight Authority Mr. C Amoth, Dr Mang’eli defended the move saying the delay would have forced the organisation to scale down on and stall some of its core activities.

“In view of the fact that the implementation of the recommended ARB corrective measures will take time, it is impractical to wait,” he said, adding that the organisation was working toward meeting its performance contract, and implementing its strategic plan.

Further discussion
“It would be prudent to allow the organisation to immediately undertake the required statutory duty in order to safeguard the standard collection of revenue in order to meet her financial obligation,” wrote Dr Mange’li in a letter seen by Business Daily.

Mang’eli said KEBS expects the contract to generate up to Sh24 million every month.

In another letter to the energy permanent secretary, OiLbya says that the industry wants the move to be shelved pending further discussion. Nyoike responded on August 4th referring the issue to KEBS but noted that it was premature for the industry to start to anticipate an increase in petroleum prices.

“Inspection of petroleum imports by KEBS is a legal requirement that cannot be substituted by any other process being carried out by private companies,” he said.