What you need to know:
- Vivo Energy Kenya, Total Energies, Oryx Energies and Galana Oil Kenya picked to supply the smaller dealers.
- The special supplies are expected to steady stocks for the independent marketers who had been snubbed by their larger rivals.
Four large oil marketers will supply 20 million litres of petroleum products to their smaller independent rivals in an emergency deal aimed at boosting supplies in parts of the country hit by shortages.
Communication between Petroleum PS Andrew Kamau and the Petroleum Outlets Association of Kenya (POAK) – an industry lobby for dozens of independent oil dealers – shows that Vivo Energy Kenya, Total Energies, Oryx Energies, and Galana Oil Kenya have been picked to supply the smaller dealers.
In the deal seen by Nation, Oryx will supply 3.5 million litres each of petrol and diesel to the independent oil dealers while Total will supply 1.5 million litres of diesel and 2.5 million litres of petrol.
Vivo will supply 2.5 million litres each of the two products while Galana Oil will sell 2.5 million litres of diesel and 1.5 million litres of petrol.
The special supplies are expected to steady stocks for the independent marketers who had been snubbed by their larger rivals amid the high cost of importation and uncertainty over reimbursements from a subsidy arrangement with the state to keep consumer prices manageable.
Large oil marketing companies (OMCs), hit by the high importation costs due to soaring global prices, had elected to focus on their own franchised outlets, dealing a blow to independent rivals who have over the years depended on them for stocks.
The large OMCs cut their stock purchases through the Open Tender System amid liquidity challenges, consequently cutting stocks to their smaller rivals who make about 68 per cent of the country’s retail stations network.
Mr Kamau told the Nation yesterday that fuel supply in the domestic market is expected to further stabilise next week when two vessels – Mt Campo Square and Mt Elika Athina – offload their cargo.
“The consignment in these two vessels is one hundred per cent dedicated to the local market,” he said.
Oryx bagged the tender to import 51.5 million litres of diesel on board Mt Rich Breeze, which is currently discharging the cargo into the Kipevu Oil Storage Facility.
Galana also won the tender to import 120.9 million litres of petrol aboard Mt Campo Square, which has already docked at the port waiting to discharge. Also scheduled for import by Oryx is 106.7 million litres of diesel aboard Mt Elka Athina, expected to berth at the port on May 12.
On Wednesday, the Petroleum ministry reached a deal with large oil marketers to re-route 20 million litres of products for export into the domestic market.
This came after an audit by the ministry revealed that OMCs were holding 34 million litres of the excess transit volumes within the Kenya Pipeline Company system as of Tuesday, even as consumers in parts of the country, especially western Kenya and the North Rift, reported unreliable supplies.
The audit showed that oil marketer, Asharami held the largest volume of excess export stocks, with the state directing the company to sell up to 13.19 million litres of its consignment locally.
Total Kenya was required to re-direct some 2.4million litres into the domestic market.
Lake Oil and Fossil Fuels Limited were also found with large volumes of the excess export product. They were ordered to re-direct two million and 1.53 million litres of their stocks, respectively, into the domestic market .
The audit revealed that other OMCs also held sizeable volumes of excess stocks for export. They include Starbex International Limited with 708,000 litres, City Oil (K) Petroleum (890,000), Torch Energy (752,000), and Galana Oil Kenya (694,000).
The tug of war between the small and large OMCs has left several outlets, especially in western parts of the country, without sufficient stocks.
The western parts of the country are worst hit by shortages because the market is dominated by small dealers.
The large multinationals deserted the area decades back due to dumping of export products meant for Uganda and the Great Lakes region.