Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Kenya

Deal struck to end high fuel costs

NAIROBI, Kenya, Sep 23 – KenolKobil will now be able to refine its oil at the Kenya Petroleum Refineries Limited (KPRL) in Mombasa following an amicable agreement with the government.

Energy Permanent Secretary Patrick Nyoike said on Thursday that this would address the fuel shortage currently being experienced in the country as a result of the dispute between KenolKobil and KPRL over the latter\’s decision to cancel the oil marketer\’s processing agreement.

He said a deal had also been reached between KenolKobil and Kenya Pipeline Company to enable the marketer to pay up the entire amount owed to the refinery.

"Because of the urgency of this matter, effective tomorrow (Friday), KenolKobil will have its license reinstated or granted by the Energy Regulatory Commission to enable them start processing crude oil. Because their market share is about 18 percent, their volume is equally large," he said.

On July 12, a court ruled that KPRL was right to bar KenolKobil from processing crude oil at the refinery and declined to refer the matter to an arbitrator.

As a result, the company\’s crude oil base load is now being re-shared amongst other players, a move that the oil marketer said was unfair to the innocent parties that might fail to meet their processing obligations and thus affect product supply.

"Those random imports have been the cause of ullage constraints so what we have decided to do is to ban those random unscheduled imports," he added.

The dispute between the two parties has been a long drawn one and arose over the non-payment of Sh456 million incurred as processing fees that were adjusted in 2006 and in 2008.

KenolKobil had in the two instances contested the 26 percent and 12 percent increments saying they were unjustified as the refinery was still inefficient. Citing reasons such as yield shifts, fuel loss and business as well as inefficiency issues, the firm filed a case in the High Court claiming damages amounting to Sh4.9 billion.

During the press conference, the Energy PS further pointed out that the dispute between KenolKobil and the Kenya Pipeline Company had been resolved.

Advertisement. Scroll to continue reading.

"Yesterday\’s (Wednesday) meeting was with the pipeline which again has had major disputes with KenolKobil as you know. That dispute was resolved and as a result of that resolution, KenolKobil signed a transport and storage agreement with the pipeline effective immediately," he said.
 

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...