May 9, 2011


Two days after Nairobi was brought to a standstill by allegedly dry fuel reserves, the Forum investigates why this happened.

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Why Nairobi’s fuel pumps ran dry of petrol

Why Nairobi’s fuel pumps ran dry of petrol

Queuing motorists and stranded shoppers in Nairobi knew it nearly two days before The Nation and Standard newspapers got around to catching up with the real news on the streets of Nairobi: the petrol stations of the nation’s capital had run dry. The odd thing was that the Kenya Pipeline Company (KPC) reported it was “wet” with product with 19 million litres of fuel in its tanks.

So what happened, what caused the problem? Mismanagement, incompetence, weak infrastructure, plain bad luck and greed were all contributing factors but The Forum can report that which the newspapers only hinted at – corruption at a high level in the Ministry of Energy played its part.

As the crisis developed various explanations were given for its occurrence and the blame-game got underway: there was a lack of storage space; dealers would not buy stock after the price had been pushed up by the Ministry of Energy and importers; administrative failure compounded by a holiday weekend; delayed payments by marketers; an electrical failure at the Mombasa refinery; and dealers withholding stock to take advantage of new tax regulations, these and other theories and excuses were trotted out.

Post event, as the queues subsided and life began to return to normal it was The Sunday Nation that produced perhaps the most accurate explanation with an investigation in last weekend’s paper – ‘Why there was too much petrol in store but little in the pumps’. But the Nation’s reporters pulled there punches somewhat.

The first paragraph of the article appeared to come up with two causes for the chaos: ‘Fear of reduced profitability by oil marketing companies and the government’s rush to announce tax cuts on fuel without proper implementation plans’ were the main causes it stated. According to The Sunday Nation, ‘oil companies deliberately delayed to evacuate diesel and kerosene from the supply chain to take advantage of recent reductions of duties and taxes on the two commodities’, which resulted in no storage space for petrol.

Fine, but which ‘oil companies’? The Nation, both on Sunday and a few days earlier pointed the finger not at Total and Kenol Kobil, the big players in the market but rather at much smaller independents named as Addax Kenya Ltd, Royal Energy Lt, Gulf Oil and Prisco Petroleum Network, companies with few or no retail outlets. These companies and others, it was revealed, were sitting on most of the 19 million litres of petrol held in KPC tanks.

There was more. It was also revealed that of the 53 licensed importers who were allocated ‘ullage space’ in April less than 10 owned retail outlets. It is these small companies, ‘briefcase’ traders and speculators, reported The Nation, that are the ‘big winners’ in the ‘Open Tender System (OTS) run by the industry under the oversight of the Ministry of Energy’.

And The Forum can report (resulting from conversations with two journalists working for different newspapers and with two individuals involved with the major retailers) confirmation of allegations that have been circulating for months, that at least one high level official in the Ministry of Energy is directly involved with trading in fuel and allocating ullage space.

There is much to be done to ensure that Kenya’s capital isn’t needlessly brought to a standstill again. One urgent action is for a really ‘independent’ investigation into allegations of improper involvement in fuel trading by an individual, or individuals, in the Ministry of Energy.


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