Oil marketers hoard stock, anticipating price increase

•Large Oil Marketing Companies (OMCs) and retail station dealers are said to be hoarding product in speculation of higher pump prices in next week’s monthly price review.

•Shortage has been reported in Western Kenya,Nairobi, Mombasa and other major towns. Vehicles line up at Total petrol station in Eldoret./ Petroleum dealers could be hoarding fuel products anticipating an increase in pump prices on Sunday so that they could benefit from stocks earlier sourced cheaply.

The Energy and Petroleum Regulatory Authority (EPRA) has now warned the against this as fuel shortage is reported in parts of the country.

According to the regulator, the artificial shortage is widespread in Western Kenya.

A survey by the Star yesterday established parts of Nairobi, Mombasa and other major towns have also been affected with several stations especially those run by independent oil dealers saying they had run out of stock.

Large Oil Marketing Companies (OMCs) and retail station dealers are said to be the hoarding product hoping pump prices in this month’s price review by EPRA will go up based on recovering global crude prices.

EPRA said the country has sufficient petroleum stocks and those found to be hoarding petroleum products risk a one-year jail term or a one million shillings fine including revocation of their licenses.

“However, preliminary investigations indicate that a number of OMCs are deliberately holding back sales to non-franchised petroleum retailers (independents) in anticipation of a price increase,” EPRA director general Pavel Oimeke said.

Kenya Independent Petroleum Distributors Association claimed big players have locked independent retailers from business by cutting the supply chain.

“It is very serious. We cannot access fuel products. We are forced to buy from pump stations ourselves,” chairman Joseph Karanja told the Star.

Stocks being held by OMCs are from February, March and April as pump prices significantly dropped in May.Last month, Supply Coordination Committee (SupplyCor), the umbrella body for oil marketing companies in Kenya which coordinates activities along the fuel supply chain, had asked EPRA to compute May and June prices based on crude oil prices for February and March when prices were higher.SupplyCor, chaired by KenolKobil’s General Manager Martin Kimani, said OMCs were unable to sell in February and March 2020 priced cargoes during April 2020 as a result of reduced sales.Overall industry trend shows a 60-65 per cent drop on consumption of fuel products , according to Supplycor.“This disruption of sales has therefore led to accumulation of older priced cargoes in the system which […]

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