ERC wants teeth to bite oil firms

November 24, 2010
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, NAIROBI, Kenya Nov 24 – The Energy Regulatory Commission (ERC) says it remains powerless to intervene in the current fuel crisis in the country, in the absence of a legal notice on recommended prices.

In 2009, the ERC drafted the Petroleum Price Regulations that spell out a fuel price calculation formula that works out standard retail prices for fuel in the country.

The regulations are yet to be gazetted, limiting the mandate within which the regulator can step in and stabilise fuel prices in the country.

ERC Director-General Kaburu Mwirichia said on Wednesday that with the formula in place, the ERC would be empowered to cap pump prices at levels it feels are acceptable to both oil marketers and consumers.

“The government has not gazetted these rules but there are mechanisms through which we can control fuel prices in the country,” Mr Mwirichia said.

Although the regulations had been forwarded to the Attorney General, Mr Mwirichia revealed that implementation was cautioned by the National Economic and Social Council (NESC) and the Treasury arguing, “it would hurt” the economy.

The fuel market remains liberalised with the government seemingly in favour of a competitive market.
 
On Tuesday, Energy PS Patrick Nyoike said the Energy Act of 2006 gives the minister power to control retail prices of petroleum products.

“The rising fuel prices are unacceptable. They make life difficult for Kenyans and hurt the economy,” he said, adding, the planned legal notice would address the problem.

NESC also seems to have changed its tone calling for the strengthening of the ERC to effectively manage fuel prices in the country.

During the 23rd NESC meeting held last week, the council said it wants the Ministry of Energy to make regulatory arrangements that would ensure retail prices are kept at reasonable bounds.

The regulations call for the regulating of super, paraffin and automotive diesel. Under the regulations, the recommended price for super would be Sh94.78, paraffin Sh76.57 and Diesel Sh87.87.

“Calculations based on the proposed price capping formula indicate that the current pump prices in the city centre and other western suburbs of Nairobi are higher than the maximum recommended,” Mr Mwirichia stressed.

In Nairobi, petrol prices have risen by as much as Sh7 a litre in the past month, reaching Sh105 in some stations.

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