Fuel price cap stays, vows Murungi

December 7, 2010

, NAIROBI, Kenya, Dec 7 – The Ministry of Energy is battling attempts by oil marketers to convince Parliament to overrule a decision to regulate oil prices and have 30 percent of imports of crude oil, jet fuel and automotive gasoil reserved to the National Oil Corporation of Kenya (NOCK).

Energy Minister Kiraitu Murungi on Tuesday maintained that the new law would ensure security of supply of oil products and that they were distributed at affordable prices.

"The law comes into effect on December 15 so they (oil marketers) have until then to do their own domestic housekeeping but from December 15 any person selling beyond the stated price will either face the consequences of the fine (Sh1 million) or if you become notorious, cancellation of your trading license," Mr Murungi warned.

The Minister accused the oil marketers of pushing to retain the status quo and said that the measures were taken as a last result.

"Some of these companies are strategic investments. There are certain areas where you can\’t leave it to the private sector and those old days of unlimited liberalisation… the open free market has its limits. Even the United States today is regulating the banks," he stated.

"It will be unwise to think that unregulated private sector can act in the best interest of the country. There has to be moderation," the Minister asserted.

The oil marketers had told the Parliamentary Select Committee on Delegated Legislation that pricing of petroleum imports into Kenya was determined by the international price of petroleum, cost of shipment and statutory charges and therefore the new regulations should be reversed.

The wanted the regulations declared illegal so that NOCK does not import the 30 percent quota.

NOCK Acting Managing Director Sumayya Hassan-Athmani said the 30 percent quota would help the corporation to get into direct engagements with producing countries.

"Before this they have been unwilling to engage with us as a country because they say that they do not participate in tenders. They want to have a guaranteed lifting every month. So with the 30 percent we have now gone back and commenced discussions with producing countries," she stated.

There has been a public uproar over the exorbitant prices of petrol with a litre retailing as high as Sh102 but which has in the past weeks been reduced by a margin of about Sh4 by some fuelling stations.


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