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Companies

Oil dealers point finger at illegal foreign dealers at airports

Joe Muganda
GAPCO managing director Macharia Irungu (left) with his Vivo Energy counterpart Joe Muganda before House team on Dec 4, 2018. PHOTO | JEFF ANGOTE | NMG 

Kenya Airports Authority (KAA) has sharply differed with oil marketing companies (OMCs) over alleged presence of foreign brokers who have taken control of the sale of jet fuel to airlines at the country’s airports.

While the KAA insists that no broker had been licensed or allowed to operate at the Jomo Kenyatta International Airport in Nairobi or any other aerodrome, the oil dealers insist that unlicensed brokers, mainly from Dubai, had infiltrated the jet fuel trade and were winning tenders as a result of their low bids.

Jimmy Kibati, general manager for business development told Parliament that the KAA plays a role in terms of licensing oil marketers to operate at the airports but does not have any role in the agreements oil marketers enter with airlines as that is purely their commercial arrangements.

“The supply of fuel is done purely between airlines and oil marketers.

“The KAA does not weigh in in any way. We license oil marketers to operate premises at the airport. The KAA is not aware of the existence of illegal companies or brokers,” Mr Kibati told the committee that was chaired by Endebes MP Robert Purkose.

He said the KAA only learnt of two companies, ASM and Pacific Limited, which operate hospitality contracts for some oil marketers. “Pacific and ASM are strangers to us despite being licensed by the Energy Regulatory Commission (ERC). There is no unlicensed person who comes without equipment to the airport,” Mr Kibati said.

But Joe Muganda, Vivo Energy managing director and the chairman of oil marketers joint company -- Supplycor Kenya Limited -- told MPs there are a lot of people supplying products at airports illegally.

“In order to supply Jet fuel A-1, you are expected to have ERC licence and participate in the open tender system (OTS) but as it is today, we are seeing a lot of people supplying products into planes who don’t have all requisite licences,” he said.

Mr Muganda said oil marketing companies have invested heavily in infrastructure to fuel planes but they are unable to compete because prices brokers offer are well below what the marketers have invested.

“Our plea is that everybody who fuels planes should follow the law and compete. The only thing we are asking for is that they have the same requisite licenses like us before they are allowed to operate. This will enable us to compete on a level field,” he said while defending a petition they filed in Parliament

Paul Limoh, Gulf Energy chief executive, asked MPs to look at the issue of pricing of fuel at the airports, which are not subject to the ERC’s monthly review.

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