Vivo wants KPRL shut over inefficiency

April 25, 2013
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Vivo Energy Managing Director Polycarp Igathe argued on Thursday that if the industry stopped using KPRL, the price of fuel would drop by up to Sh9 a litre in the country/CFM
Vivo Energy Managing Director Polycarp Igathe argued on Thursday that if the industry stopped using KPRL, the price of fuel would drop by up to Sh9 a litre in the country/CFM
NAIROBI, Kenya, Apr 25 – Vivo Energy, which has been licensed to run operations of oil marketing firm Shell in Kenya, wants the Kenya Petroleum Refineries Limited (KPRL) shut down, saying it has become inefficient and costly for the industry.

Vivo Energy Managing Director Polycarp Igathe argued on Thursday that if the industry stopped using KPRL, the price of fuel would drop by up to Sh9 a litre in the country.

“We are getting poor quality of crude oil which we are obligated to buy from an inefficient asset. Closing the refinery will reduce inflation, reduce the cost of wages and salaries and improve the cost of living,” he suggested.

Speaking at the launch of their 114th service station at Thika, Igathe said that the petroleum industry is facing challenges especially in storage, regulation, licensing and taxation.

Igathe said that there is need to verify market share (which is self declared) in the industry as it determines the storage capacity.

“The way people declare market share is wrong, the only way of verifying market share is through throughput numbers declared at the pipeline and through tax numbers. When you self declare there are chances that you will over declare, hence you get more storage,” he complained.

Igathe suggested that storage should be allocated to people with over 20 service stations and not just anyone.

“We need to support storage capacity at Kipevu Oil Storage Facility and throughput through Kenya Pipeline should be given to companies that are rolling out service stations; we have way too many players in the industry who do not have service stations, hence the licensing regime needs to change” he complained.

He revealed that there are many people who are using the pipeline to sell their products in tanks without having a service station which is constraining the supply of their products to customers.

“There are more than 70 players in the market and 90 percent of them do not have service stations; this is just creating constraints in the pipeline,” he observed.

“We need policies that will reduce price, that will reduce cost of living and accelerate employment creation in the country.”

The new Shell station on the Thika-Garissa highway is expected to provide direct employment to the youth within the area thus economically empowering them.

Igathe said they had embarked on an energy expansion strategy, investing heavily in their storage and distribution network, aimed at serving their customers better.

“We will invest over USD10 million (Sh830 million) in storage and distribution network. We have also invested USD4 million (Sh336 million) to upgrade the Nairobi Terminal Storage capacity. This was in line with Ministry of Energy policy of encouraging investment to assure security of fuel supply,” he revealed.

Vivo currently has seven million litres of storage with a capacity of fuelling 30 stations.

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