Transporters of export fuel loaded from Eldoret have expressed concern over high tariffs charged for re-filling their trucks.
The transporters say the levy imposed on them by the Kenya Pipeline Company has shot up in the last months with most transporters opting to source oil at Mombasa or lower the volumes of the imported fuel destined mainly for landlocked countries.
In Mombasa, the fuel levy is as low as $11 (Sh1,100) with some resorting to private depots in the coastal city. Previously, there had been attempts to lower fuel transport tariffs in Eldoret in a bid reduce the number of trucks on the major roads sourcing oil from Mombasa to curb oil-related accidents on the roads.
The transporters now want the cost of loading oil at the Eldoret depot to be slashed by more than $20 per cubic metres. Currently, the oil loaders are charged $54.44 (Sh5,500) per cubic metres down from $59.5 (Sh6,000).
The transporters raised the concerns during a meeting two weeks ago with the Petroleum and Mining Cabinet secretary John Munyes and Ministry’s Chief Administrative Secretary John Mosonik and Kenya Pipeline Company’s managing director Joe Sang at the Eldoret depot.
According to oil transporters, the levy has forced most of them to either reduce volumes or pass the extra costs to the consumers.
The tariffs had been lowered to about $31 ( Sh3,000) in a bid to reduce the number of trucks transporting oil from Mombasa to North Rift and western region and neighbouring countries. But the transporters say the country is losing out because the levy is lower in Tanzania.
“This high cost is really hurting transporters and driving most transporters out of business. It is important for it to be reviewed so that we can increase volumes,”said Hezekiah Kosgei, the chairperson of the Western Kenya Independent Petroleum Dealers Association (Kipeda).
Most transporters get the oil from the North Rift depot for both local and export markets such as Uganda, Rwanda and Democratic Republic of Congo.
“We are being beaten by Tanzania because the tariffs are so high that most transporters opt to go all the way to Mombasa to load the oil notwithstanding the transport costs involved,” complained another transporter at the meeting.
He added that the country could be losing millions of shillings as it is cheaper to transport oil from Tanzania to Uganda than through Kenya to the neighbouring countries where the loading levy is lower.
According to the Kenya Pipeline, they have offered a discount to oil transporters from $59.5 to $54.44 and were ready to engage the transporters to address their concerns.
Mr Sang noted that although they had slightly increased the levy last year from $38 to $41 for a period of six months, most transporters had not optimised because the depot’s Line 4 was not ready.
“Two months ago, this Line was commissioned and we are hopeful by mid-October we will reach an agreement and set the favourable tariffs,” added Mr Sang.
Mr Munyes said his ministry will hold a stakeholders’ meeting in Nairobi this month to unlock the stalemate over the tariffs.
“We appreciate the role of the oil marketers so we want to listen to them. The principle is how we can transport our oil in a safe way, in volumes and also remain competitive way. We understand that there is competition from neighbouring countries and we want to ensure we are also competitive,” said the CS.
“... we want to strike a balance where we lower tariffs so that we increase volumes uptake and the transporters make their money.”
Mr Munyes spoke when he inspected the new bottom loading facility that will increase oil re-filling of the oil trucks from 4.5 million litres to 6.5 million litres in a day as well as guarantee the health of the workers.
“It is faster and fumes are not exposed in the environment like the previous facility, so it is safer to our workers. It is also efficient which will make us competitive in the region,” noted CS Munyes.
At same time, the CS said they have injected Sh2 billion as seed capital to roll-out adoption of LPG gas to reduce the use of kerosene.
“Since, we have achieved cleaner homes through the Last Mile connection project, this LPG will ensure even cleaner environment. We want to encourage the private sector to chip in and support this noble project because this will also go a long way in checking fuel adulteration,” he added.
Kenya loses Sh34 billion annually to unscrupulous business people, who sell petrol and diesel mixed with kerosene.
The country is trying to recover a share of the market for oil products exports to Uganda and other countries lost as a result of adulteration.
The industry regulator, The Energy Regulatory Commission (ERC) estimates that about five million of the 33 million litres of kerosene consumed monthly in Kenya is utilised for lighting and cooking while balance is used for adulterating either diesel or petrol.