Kenya curbs fuel shortage: in talks with UAE to get fuel on credit
Following the negotiations which will allow the state-owned national oil corporation of Kenya to ship in 30 percent of the country’ s diesel and petrol needs as reported by top officials in the energy sector, Nock will be expected to sell the bulk of the UAE cargo to small independent dealers who have recently been cut off from the whole sale market in a shift that…
Kenya in its bid to cut off the dominance of oil majors who have been blamed for oil shortage is in talks to import a third of its fuel from the United Arab Emirate (UAE) on credit through the state owned National Oil Cooperation of Kenya (Nock) to curb oil shortage.
Following the negotiations which will allow the state-owned national oil corporation of Kenya to ship in 30 percent of the country’s diesel and petrol needs as reported by top officials in the energy sector, Nock (National oil cooperation of Kenya) will be expected to sell the bulk of the UAE cargo to small independent dealers who have recently been cut off from the whole sale market in a shift that pretty contributed to the biting fuel shortage and stalled transportation across the country. Wholesale prices nearly match the cost of selling diesel and petrol at the pump, making the business unprofitable to independent players who do not import and buy supplies from the big players. This is reportedly due to the introduction of state subsidy introduced to ease fuel cost
The UAE is said to finance the product or provide the product with an extended credit period then NOCK will trade and pay them back,” said the top official who requested not to be identified before the closure of the UAE deal.The source added that they want to give NOCK allocation to supply the independents so that the majors do not hold UAE hostage. The debt-ridden Nock was originally mandated to import 30 percent of the country’spetroleum products, including LPG, but it lost its rights when the government opened theimportation market to private firms in the 1990s.
If the State has its way, Nock will ship in 30 percent of Kenya’s super, diesel and kerosene. The imports will also be used to provide strategic stocks for the country and relieve the shortage of commodities due to disruptions globallyThis plan is supported by the Draft Petroleum Importation and Quota Allocations Regulations2022 and is aimed at boosting NOCK’s cash flows in an industry where it has struggled to keep pace with multinationals.NOCK will be handed a lifeline in the UAE import deal at a time growing losses have hurt its ability to compete with well-funded multinationals such as Total Energies, Rubies Energy, and Vivo Energy.Officials blamed the fuel shortage on oil marketing companies, accusing them of breaching the rules on minimum stocks and hoarding supplies.
Oil companies have pointed to subsidy arrears owed to them by the State for the shortage. The subsidy was introduced in April last year to stabilize prices amid suspicion of hoarding. Delays in the payment of subsidies to the companies by the government have pushed up prices in the wholesale market where oil majors resell fuel to the smaller independent fuelretailers. The marketers are said to have increased the share of fuel they sell to the neighboring countries of Uganda, Rwanda, and DR Congo to over 60 percent from the previous 40 percent of total imports to ease their cash crunch. This has further cut supply as the neighboring countries enjoy normalcy.
Article by Faith Waweru