Private oil firms will be locked out of the lucrative multi-billion government fuel tenders once supply is centralised. The government wants state owned National Oil Corporation to be the sole supplier to all ministries and agencies.
In a letter to principal secretaries dated April 30, and copied to Cabinet Secretaries, chief of staff and head of the public service Joseph Kinyua asked all ministries and government agencies, to liaise and negotiate with the corporation for supply of fuel.
In the letter referenced OP/CAP.9/108 the government allows for existing contracts to run end after which the ministry or agency shall revert to the National oil.
“… National Oil Corporation of Kenya (National Oil) presented the mandate and future plans of the corporation and a proposal for the corporation to be the supplier of fuel lubricants and bitumen to ministries and government agencies,” read the letter seen by the Star.
According to Kinyua, the “initiative will lead to cost savings, access to guaranteed clean fuel and fraud prevention through use of fuel cards”. The move has however been met with opposition by oil marketers.
Yesterday, the Petroleum Institute of East Africa criticised the move saying it was against the Competition Act.
“We can’t believe the government has put such measures in writing. Kenya is a free market. The role of National Oil is to stabilise prices,” said chairman Polycarp Igathe.
“You cannot have a price control body (Energy Regulatory Commission) and now give preferential treatment to National oil. You are simply telling the downstream to sell their assets and go,” said Igathe, who is also the Vivo Energy Kenya managing director.
NOC however defended the move saying it is a common practice for government to support corporations. It said inter-governmental procurement is also easier and shorter as compared to the private sector.
“Payment process by private sector takes long. There is a lot of bureaucracy” said National Oil Corporate Affairs Manager Temesi Mukani.
The government remains one of the main consumers of petroleum products providing a ready supply market with 19 ministries and 187 Government Owned Entities. These include commercial state corporations, executive agencies and independent regulatory agencies. The country has 97 oil marketers with about 10 major players with established retail network in the country.