Petroleum dealer sues Total for underpayment

A petroleum dealer has gone to court accusing oil major Total Kenya of paying it less margins than what is prescribed by the regulator and unfairly terminating its contracts.

Bill Investments Limited, which says its contracts date back to 2009, claims that Total is paying it margins that are lower than those prescribed by the Energy Regulatory Commission.

Kenya’s energy sector is regulated, with the ERC prescribing margins at different levels of the supply chain that determine wholesale and retail prices of fuel.

The dealer further accuses Total of charging it VAT and transport costs, arguing that these are supposed to be borne by Total.

“That under the…agreement signed between the applicant and the defendant, the defendant provides a wholesaler dealer margin that is below the legally stipulated amount being Sh3.64 for Petrol and Kenya Shillings 3.46 for diesel,” says the firms’ director Celia Kamene Muindi in court documents. The firm claims that the Energy Act and the Energy (petroleum) Regulations 2010 prescribes that as a dealer it is entitled to a wholesale dealer margin profit of Sh3.89 for petrol and diesel.

The firm argues that this is violation of the law that provides for this margin.

The firm says that Total terminated their marketing licensing agreement on May 4 2018 after a dispute arose regarding the paying of lower margin than recommended, leading to the court action. The firm further argues that the margin is meant to protect customers so that dealers cannot levy separate profit margins.
The firm says Total uses its bigger bargaining power to bypass the margin as per the law.

The firm has been operating two of Total stations— New Mombasa Road Petrol Station and Likoni Road Petrol Station since 2009.

It further says the underground tanks of one of the stations has leakages that has caused it loses.