House team blames Kipevu oil terminal for rising fuel prices
NEGLIGENCE: The Kipevu Oil Terminal is a source of pilferage for petroleum duty, contributing to the high cost of the commodity consumers are currently bearing with.
Gladys Wanga, chairperson of the National Assembly’s Departmental Committee on Finance said officials at the Jetty abet the inefficiency by delaying the discharge of oil that is accruing demurrage charges running into millions of shillings every day.
She said the Kenyan taxpayer is paying for the negligence by up to Sh30 million for every ship that docks.
Up to 60 oil tankers have docked at the facility between January and June 2021, with some overstaying by 10 days, she said.
A demurrage charge is a fee paid when an oil tanker arrives at the terminal to discharge oil and has to wait beyond the stipulated time. It is charged on an hourly rate, based on the agreed market price.
According to the Energy, Petroleum and Regulatory Authority, demurrage charges for supply of super petrol attract 27 cents per hour, while that of diesel 29 cents and 9 cents for Kerosene.
“This is money transferred to the consumer immediately because every demurrage charge is included into the landing cost,” said Wanga.
“If I am the person coming with the ship, if I am at the Jetty, where is the incentive for efficiency.
There is no incentive because you are being paid to be inefficient,” she said. She was speaking during the committee hearing yesterday, in which the Ministry of Petroleum and Mining declined summons to appear, instead pleading for the week of October 18, 2021 with claims that the Principal Secretary was abroad on official duties.
However, the committee would have none of it, and invoked section 191 of the standing orders compelling the Cabinet Secretary or the Principal Secretary to appear before them today at 10 am.
The committee has been collecting views from different stakeholders including Independent Power Producers and Ministries of Petroleum and Mining, and National Treasury.