Static margins have forced oil marketers to turn to volumes to grow their earnings. FILE PHOTO | NMG Oil marketers are expecting the government to raise their profit margins this year, a move that will boost their earnings.
Petroleum price controls started in December 2010 when the maximum margin per litre was set at Sh6 at wholesale and Sh3 at the retail level.
Oil marketers say the margins, controlled by the Energy and Petroleum Regulatory Authority (EPRA), have remained at the same level since then despite rising inflation over the years.
“The government launched a study in 2017 to review the retail price structure whose outcome is still being awaited for by the industry. The company looks forward to an increase in margin in 2019,” Total Kenya says in its latest annual report.
The EPRA and the oil marketers’ lobby -Petroleum Institute of East Africa- had not responded to our queries by the time of going to press.
The static margins have forced oil marketers to turn to volumes to grow their earnings besides reducing other operational expenses including finance costs.
Price of premium fuels are, however, not regulated, benefiting firms dealing in such value-added products including Vivo Energy Kenya (which operates under the Shell brand).
Big players including Total #ticker:TOTL, Vivo and KenolKobil #ticker:KENO are expected to benefit the most on account of the large volumes they move at wholesale and retail level.
The firms have complained that the margins have remained unchanged despite a general rise in the cost of doing business, squeezing their earnings.