Divert ERC budget to National Oil – Mungatana

January 16, 2012

, NAIROBI, Kenya, Jan 16 – Garsen MP Danson Mungatana wants the Government to scrap the Energy Regulatory Commission and redirect its operational budget to the National Oil Corporation of Kenya (NOCK) in a bid to stabilise retail fuel costs.

He claims the commission has failed to protect consumers by colluding with multinational fuel firms to keep oil prices high.

“The establishment of the ERC as far as I’m concerned is a waste of taxpayers’ money, because it has completely failed. The only time ERC works is when they are raising pump prices. In order to save some taxpayers money, the first thing the Minister (of Energy) must do, is that entire budget must be directed to support the NOCK,” the Garsen MP said.

The ERC on Saturday capped the maximum pump price in Nairobi at Sh111 for the next one month down from the Sh119 that it has been selling at from December 15 for super petrol. But some petrol stations were yet to adjust their pump prices by Monday.

“People have fees to pay, business must pick up for us to support our children in school, we need the fuel in the economy and you are hoarding it just because you want to make an extra Sh20 on your pump prices, shame on you!” Mungatana hit out at the marketers.

The Commission calculates and publishes the recommended monthly maximum retail prices of petroleum in accordance with Energy (petroleum pricing) Regulations of 2010.

Through their lobby the Petroleum Institute of East Africa (PIEA), the marketers said outright knowledge that prices would be coming down a week in advance might see a number of players engage in practices that might be detrimental to both industry and general public.

Oil marketers have expressed fears that it might cause speculative trading among some industry players, who are likely to take “measures to mitigate against undesirable business exposure”.

By ERC projecting fuel prices, the Government will be seen as applying double standards because it had warned other industry players from making such pronouncements.

The Ministry of Energy last year banned marketers from forecasting fuel prices. PS Patrick Nyoike had given the reasons that forecasts might trigger irregular trade practices among some players.

Mungatana says NOCK as the fifth biggest marketer requires at least Sh5 billion to establish a presence countrywide.

He said: “Let them be given the support to enable them expand their infrastructure so that they can be able to play the stabilizing role in petroleum policy.”

ERC Director General Kaburu Mwirichia said the new prices reflect a dip in the cost of the products’ importation as well as the strengthening of the shilling.

The Commission, however, warned that it would impose a maximum fine of Sh1 million and/or revoke the operating license of any petroleum dealer who sets their retail prices beyond the maximum that the commission has set.


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