ERC says Iran deal setback won’t affect supply

July 6, 2012
Mwirichia however said Kenya may now be forced to look for options and forget Iran deal/FILE

, NAIROBI, Kenya, Jul 6-The Energy Regulatory Commission (ERC) says the cancellation of oil deal between Kenya and Iran will not affect the country’s oil supply.

Speaking at a media briefing ERC Director General Kaburu Mwirichia who remained hesitant about the matter said the deal had not yet been factored into the county’s supply chain.

Mwirichia however said Kenya may now be forced to look for options and forget Iran deal, due to the international pressure from the West following sanctions to Iran.

“We normally get our oil through an Open Tender System (OTS) for the refined and also the crude products. But whatever you are calling a deal, maybe was a different arrangement being worked out between the governments and it will not affect supply because we have not changed our supply mode,” Mwirichia said.

On Wednesday the government announced cancellation of a Memorandum of Understanding it signed with Iran last month for the importation of four million tonnes of Iranian crude oil per year.

Kenya had turned to Iran, a country facing crippling economic sanctions from the West over its reported nuclear weapons ambition, to secure long-term fuel supply contracts.

This was the first time Kenya was officially seeking government-to-government fuel supply contracts.

Meanwhile Mwirichia said hopes for further drop in fuel prices in the Month of July are high adding that the prices in the international prices continued to go down.

“Last month the conditions were good and there was a drop. The conditions are quite good and we are consequently in line with that. We hope for the best though we have not finished looking at the numbers,” the ERC boss said.

On June 14, ERC announced a Sh3.46 drop for a litre of super petrol, Sh2.93 drop for a litre of diesel and kerosene by Sh3.80, citing drop in costs on the international market plus stability of the Kenyan shilling against foreign currencies.

On the issue of Liquid Petroleum Gas (LPG) Mwirichia said the prices are expected to drop in a month’s time after the completion of a storage plant in Mombasa.

“We will now be able to get big cargo of LPG and have enough space for storage. We will import around 8000 metric tonnes instead of less than 2000 tonnes currently,” he said.

However ERC insists that it is not going to regulate LPG due to the current competition and the new development.

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