Small oil marketers hail scrapping of subsidy, say it was controlled by cartels

Mt Kenya East Petroleum Dealers Association chairperson Ms Irene Kimathi

Mt Kenya East Petroleum Dealers Association chairperson Ms Irene Kimathi during a press conference in Meru. The small marketers hailed the move to scrap the subsidy saying it was controlled by cartels.

Photo credit: Gitonga Marete | Nation Media Group

Small players in the oil marketing sector have hailed President William Ruto's move to scrap the fuel subsidy saying the programme was steeped in secrecy and controlled by cartels.

They said introduction of the subsidy marked the culmination of a deliberate move by big players involved in the open tender system to kick them out of business.

Speaking in Meru town on Saturday, Mt Kenya East Petroleum Dealers Association chairperson Ms Irene Kimathi said independent oil marketers were threatened with closure due to unfair competition. The other category is the franchised marketers who get fuel supplies from relevant multinationals.

The small marketers now want government protection from the main players who they accuse of engaging in unfair practices with the aim of edging them out of the market.

“We are happy the subsidy has been removed because it was not benefiting us. Even before it was introduced there was a deliberate move to strangle us out of business,” Ms Kimathi said.

She appealed to the government to urgently refund millions of shillings held in the subsidy programme to enable them manage costs.

Ms Kimathi said despite a formula for calculating wholesale prices for various fuel products being in place, it was not adhered to.

The Energy and Petroleum Regulatory Authority (EPRA) announces retail fuel prices on 14th of every month, but does not disclose wholesale prices.

Just a few oil marketers participate in the open tender system, import oil and sell it to small players.

“We want wholesale prices enforced because this is the new front being used to frustrate us. They sell to us at near retail prices in Nairobi and if you factor in transport and other costs you realize we operate at huge losses. The intention is to ensure we don’t make profit, forcing us to opt out," Ms Kimathi said.

“Initially we used to have many players importing oil but today there is no competition and we are at the mercy of a few wholesalers who at times refuse to supply us the products saying their obligation is to first supply franchised dealers. It was designed that National Oil supplies us but that does not happen,” she added.

Dr Mbaabu Muguna, the association vice chairperson said over the past two years they had struggled to remain in business but had been stifled by the big players.

“We are the hustlers of this sector who play a key role of distributing fuel to the villages but our role is not recognized. We want the new government to address our issues and protect us because we are also investors,” Dr Muguna said.

While multinationals including Vivo Energy, Total Energies, Rubis and National Oil control about 60 per cent of Kenya’s oil market share, the small players together share the rest of the market.

To stem the skyrocketing fuel prices, they proposed that the VAT on fuel should be scrapped and other taxes rationalized to avoid double taxation.

“When for instance we order 10,000 litres we are at times supplied with 9,900 litres yet we are required to p ay tax for the 10,000. This practice is hurting our businesses and we want the Kenya Revenue Authority (KRA) to address this matter,” said Ms Kimathi.

New fuel prices announced by EPRA on Thursday saw the price of petrol hit a historic high of Sh179.30 per litre while diesel is retailing at Sh165 with taxes accounting for about 40 per cent of the pump prices.

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