Kenya to import 100pc refined petrol

May 10, 2011
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, NAIROBI, Kenya, May 10 – The government has now directed the 100 percent importation of super petrol into the country, and suspended a requirement for at least 40 percent of the product to be processed at the Kenya Petroleum Refineries Limited (KPRL).

This is one of the measures that the government has resorted to ensure the availability of petroleum products throughout the country following the failure of the refinery to operate at full capacity.

"The government will temporary be importing 100 percent of super petrol demand until the refinery can stabilise and it will be done through OTS (Open Tender System)," Energy Permanent Secretary Patrick Nyoike disclosed on Tuesday.

The facility which is meant to supply 40 percent of super petrol consumed in Kenya has almost grinded into a halt due to the challenges meaning that it is unable to meet the country\’s demand.

Its operating capacity over the last two months has been pegged at 25 percent, a scenario that has often led the oil dealers to opt for imported products which are often cheaper than the locally processed ones.

But in a bid to have these bottlenecks addressed once and for all, the government is mulling a plan that will transform KPRL from a processing refinery into a merchant one.

This means that it will be able to import crude oil, process it and sell it to the market as opposed to the current system where it is the oil marketers that bring in the supplies and pay a fee to KPRL for refining it.

With this new arrangement, the PS explained that the refinery will absorb the inefficiency costs which will in turn translate into reduced pump prices for consumers.

"We recognise that we cannot continue with that kind of arrangement any longer where the responsibility of absorbing the losses lies with the oil marketing companies. So because costs are escalating, we will transfer that responsibility to the market," the PS added.

However, the government acknowledges that this will be an uphill task that will require a holistic approach if it is to have the desired effect.

It is therefore developing a roadmap to guide the process that will include the establishment of facilities to store the products.

Mr Nyoike, however, could not give the timelines of when this was likely to take place only pointing out that technical and financial audits would have to be undertaken before the guidelines can be enforced.

But even as all these changes are being made, the government has remained mum on whether the proposed modernisation at an estimated cost of Sh89 billion will take place.

Essar Oil Limited that co-owns the refinery is awaiting the report from their consultants on which design they should adopt to improve the efficiency of the facility.

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