COPIED
..
The Fuel Prices Riddle..The question is to reign on the Multinationals hold on the Kenyan Fuel industry
Subsidies are not the answer but STRUCTURED management of the Industry is.
1) Remove the Subsidies,work on the Variables on the Pricing/Costing formuls and on the TAX indices
2.Enhance the Ministry ot Petroleum/Energy/Mining Capacity to align the relevant Parastatals under its watch and harvest the accruing synergies.
-The National Oil Corporation of Kenya(NOCK)
-The Kenya Pipeline Corporation (KPC) on Logistics and distribution and by extension storage
-The Dormant Kenya Petroleum Refineries ltd(KPRL) on refining..upgrade it and harvest the synergies from the new Kipevu Oil Terminal(KOT) and the Kenya Oil Storage Facility(KOSF)..If proven not viable,work on the proposed Lamu Merchant Refinery in Lamu through the LAPSSET corridor.
These parastatals need ro be brought together and be made to work in unison and not in competition with each other and then finally the Energy Petroleum & Regulatory Authority(EPRA) should be on its REGULATORY role but under NOCK..but principality,the Country needs a ROBUST FUELS/PETROLEUM RRSERVOIR POLICY..that would invest in the development of its Storage facilities and assets, say,a reservoir Policy that can cover the Country's requirements snd demands for at least 6-12 Month period as opposed to the now online-use(Ship to Pump) kind of Imports and storage,which is prone to immediate global price movements.
The Country is mature in its Oil & Gas Industry and we should reduce the over-reliance on the Oil & Gas Multinationals that are more on the downstream(Retail & Marketing),like in Nigeria, the Multinationals should be licensed to be on the Upstream only and leave the downstream aspects of the Induatry to the Kenyan Oil Marketing companies .Less roles should be left/given to the current Oil & Gas Multinationals of :-
Shell/Vivo
Total Energies
Lexo
Oil Libya Africa(OLA)
Rubis et al in the downstream but more support given to the mid-tier Kenyan Oil Marketing Companies (OMCs) like:-
Hash
Hass
Astrol
Delta
One Petroleum et al
NOCK should be given the chance to actualise its mandate ..one of them being in control of the monthly Open Tender System(OTS) and the strategic capacity to import at lesst 1/3 of the Country's demands.
Control the monthly Open Tender System(OTS) under NOCK
Increase the storage capacity of the Kipevu Oil Storage Facility(KOSF) to buffer Price hikes as we develop the FUELS STORAGE RESERVOIR policy..we need strategic reserves that can cushion the Country.
LASTLY...Lets work on the Oil & Gas infrastructure development ..starting from :
1) The Tullow Oil fields,the Proposed Lamu/Lapsset Merchant Oil Refinery in Lamu ..manage the Transfer of the same assets to the Indian consortium.
2) The proposed KPRL upgrade and activation of the new Kipevu Oil Terminal(KOT) at the Kenya Ports Authority(KPA) in Mombasa.
3) The Kenya Pipeline Corporation(KPC) logistics upgrade and distribution Mandate.As a midstream Parastatal ,KPC has a role in reducing the pricing and costing of fuel products in the Country. Strategic depots development shall assist..these depots in.
Mombasa
Nairobi
Nakuru
Eldoret
Kisumu and
Sagana..reduce the price of logistics/Storage /transport in those areas and it would have an input in the last price.
4)The development of common-user depots/loading facilities shall also go along way in reducing the price of petroleum products
There is more that can be done on the Petroleum products costing and pricing but MUCH can be harvested within by relooking at the entire chain backwards and go for the low handing fruits that can be managed now and the benefit spread out in the Market and cushion the People.There is alot of waste/cost duplication that can be REWORKED on but majorly the TAXES .
Regards
Eng Dzombo Mbaru
CEO-Mardin Energy Ltd
15th September 2022