The debate over the importation of 30,000 tonnes of gasoline into the country over the holiday season has heated up, with the government accusing Rubis Energy and an oil marketers’ organization of attempting to create a fake scarcity.
Last month, Christian Bergeron, CEO of Rubis Energy, and Abdi Salaad, chairman of the Oil Marketers Association of Kenya (Omak), wrote a protest letter to the Petroleum Ministry and the Energy and Petroleum Regulatory Authority (Epra), claiming that cargo importation and offloading were illegal because they were done outside the Open Tender System (OTS).
However, Principal Secretary for Petroleum Andrew Kamau refuted their accusations, claiming that they were created in order to create a fake shortage and cause a security fear as motorists scrambled for the limited amount of super that would withstand the projected outage.
“We are surprised that you chose to go public even after attending the Vessel Scheduling Meeting (VSM), stating that this was a private cargo/illegal cargo.” In the letter obtained by the Business Daily, Mr Kamau added, “This kind of insincerity is not only unjust but also unacceptable.”
“You hinted that the country was about to run out of goods, which is problematic since it would cause panic buying and an artificial shortage.”
VSMs are meetings when industry participants and regulators discuss how different ships transporting petroleum products will be lined up at the port and allowed to discharge their cargo.
The 37.5 million litres of super fuel were imported by Gulf Energy onboard the MT Jag Prarena.
According to the ministry, players agreed on an emergency stock to avoid supply disruptions throughout the Christmas and New Year holidays.
According to Rubis Energy and Omak, the vessel’s schedule caused delays for other ships waiting to dump fuel, as well as an additional Sh100 million in demurrage expenses (waiting fees for delayed ships).
Rubis Energy is the third-largest player, with a 7.42 per cent market share, behind Total Energies (18.17 per cent) and Vivo Energy (21.17 per cent).
Rubis Energy was present in a Zoom meeting on November 30, 2021, according to the minutes, where the procurement of an emergency store of super fuel was discussed.
Petroleum Secretary John Munyes, Epra, Kenya Pipeline Company, Director of Criminal Investigations, and the Ethics and Anti-Corruption Commission are all copied on the letter.
Rubis Energy had stated that importing super fuel violated the OTS’ terms and conditions, a view that Omak agreed with.
Mr Bergerone wrote in his protest letter, “We desire to voice our displeasure with the manner the import was arranged to give an unfair advantage to a few OMCs (oil marketing firms), which is contradictory to the OTS terms and conditions.”
Due to a spike in demand over the festive period and power-related issues on all of its main lines, the Kenya Pipeline Company, the state organization in charge of storing and distributing fuel, warned last month of inconsistent availability of super petrol in Nairobi and western Kenya.
Mr Kamau justified the choice to import the cargo, claiming that it was made to avoid a repeat of a 2013 situation in which an OMC charged with importing jet fuel failed to deliver the product, exposing the country’s air transportation sector.
“The Kenyan people’s interests come first.” Managing the oil business today, therefore, necessitates a high level of sobriety,” Mr Kamau concluded in his letter.
The Petroleum Act of 2009 makes private imports of refined petroleum products into the country illegally and empowers the Ministry of Petroleum and Epra to monitor petroleum product imports via the OTS.
The mechanism allows the lowest bidder on any product to import on behalf of all other oil companies.
The tiff pitting the ministry against French-owned Rubis Energy and Omak follows an industry conference last month at which Total Energies, Vivo, Ola, and Rubis Energy reportedly demanded additional inventories to meet a jump in demand around the holidays.
The letter appears to be putting Rubis and Omak on a collision course with the State ahead of a planned industry meeting for Tuesday and Wednesday next week, which will include a review of the present OTS.
“On the 25th and 26th of January 2022, the ministry has arranged a two-day workshop for CEOs to assess the present status of the Open Tender System (OTS) terms and conditions. As a result, I’m writing to invite you to this meeting,” Mr Kamau wrote in the letter.
