Raila: Decentralise strategic fuel reserves
Former Prime Minister Raila Odinga yesterday proposed the decentralisation of the petroleum strategic reserves from the Port of Mombasa to the rest of the country to cushion Kenyans in times of crises.
He said to put up strategic reserves in places that are not vulnerable to any interference is urgent so that the country is not taken by surprise.
“In future, there is a need for this country to address the issue of strategic reserves properly,” he said in Nairobi when addressing petroleum industry stakeholders.
Raila spoke even as it emerged there is enough fuel stock to run the country for close to two months.
Data with Kenya Pipeline Company (KPC) shows there are enough petroleum products in stock and in the high seas waiting to be offloaded, all totalling to around 780 million litres.
Raila called on the stakeholders to work out a comprehensive programme on how the country is going to deal with importation and distribution issues to cushion citizens from a crisis in future.
“This is an unavoidable situation,” he said, pointing out that what’s facing the country is an issue that needs to be dealt with properly even as stakeholders called on the government to put in place measures that give room for predictability of future shocks.
Raila said since the government doesn’t have other sources of income apart from taxes, price instability for petroleum products will be experienced occasionally.
Practical solutions
“If the prices are much higher than the taxes it collects, whether it gets that additional fund to pay at the end of the day there will be price instabilities,” he said and called for extensive national dialogue to come up with a practical solution to deal with the issue.
“But above all, we have to cushion the consumer from the suffering which is going on at the moment,” he added.
KPC Managing Director Macharia Irungu revealed that the company is holding 200 million litres of Premium Motor Spirit (PMS), 160 million litres of diesel and 60 million litres of jet fuel, and 120 million litres of Super petrol in the high seas.
“The country has all the products it requires for the next one month and a half, but what’s of concern is where we will we take these products if this impasse is not resolved,” he said revealing that another two vessels have docked with an additional 120 million litres of jet fuel and another 120 million of super petrol to be offload in the next two days.
National Oil Corporation of Kenya (NOCK) Chief Executive Officer Leparan Ole Morintat said the country should be agile enough to put in place a strategy to address the shocks related to such an emergency in future.
Reserves fund
He said NOCK is prepared to participate through a legal notice that incorporated 30 per cent of petroleum products requirements for the country.
This was done through a legal notice that was published for public participation in February.
He said Legal notice No.43 mandated NOCK to set up and manage strategic petroleum reserves to last the country 90 days.
“If the Energy and Petroleum Regulatory Authority (EPRA) published regulations to operationalise the strategic petroleum reserves function by creation of a Petroleum Strategic Reserves Fund is approved we will be going to manage this,” he said.
Morintat said the funds are expected to sustain the country for up to 90 days and will provide petroleum products to sustain the country for 90 days equivalent to an estimated six billion litres of products imported per year.
Input process
“Once the regulations are approved, it will enable NOCK to secure the country in terms of supply of unfranchised petroleum outlets and to replenish the 30 per cent import quota,” he added, noting that the existing crisis requires a holistic approach in order to avoid it in future.
Wanjiku Manyara, the Director of Petroleum Institute East Africa, said the petroleum industry is overburdened by debts because it has to keep the consumer going and called for timely disbursement of funds.
“There is a need for a timeline within which the oil marketing financial capability is kept available so that there is purchasing power of the product that’s already within the KPC pipeline and distribution of the same across the country,” she said, noting that there is sufficient fuel in the country.
She called on the prioritisation of the gazettement of the governing regulations by hastening the formulation and stakeholder input process.
“In the interim of implementing the applicable regulations, a binding agreement with at the very least featuring the timelines for disbursement of the deferred margins along with the requisite formula should be drawn out and signed off by OMCs, National Treasury, MOPM and EPRA,” she pointed out.
She said the industry has advocated for the development of a holistic National Tax Policy that will review and justify all the existing taxes including those in the petroleum sector so as to prevent arbitrary changes to the taxation system.
