The Energy and Petroleum Regulatory Authority (EPRA) has introduced a compensation arrangement for oil marketing companies supplying additional fuel to Kenya, as concerns grow over possible shortages at petrol stations.
In a letter dated Tuesday, October 27, EPRA Director General Edward Mwirigi Kinyua assured oil marketers that they would qualify for advance sales compensation for petroleum volumes exceeding those factored into the current and subsequent fuel pricing cycles.
The arrangement is intended to cover additional costs that arise when the cost of supplying fuel differs from the prices considered during monthly price reviews, a situation known as price lag.
“The Energy and Petroleum Regulatory Authority (EPRA) wishes to assure Oil Marketing Companies (OMCs) that where individual OMCs access volumes in excess of the volumes factored in the current and subsequent cycles, the excess volumes will be due for advance sales compensation,” Kinyua said in the letter.
EPRA added that the additional fuel volumes and related costs would be considered on a first-in, first-out basis. The quantities supplied and the costs incurred will be verified using data from the Kenya Revenue Authority (KRA).
The announcement comes after independent petroleum dealers warned of possible supply disruptions, accusing some oil marketing companies of charging wholesale prices above the maximum limits set by the regulator.
In a joint statement issued on Tuesday, the Petroleum Outlets Association of Kenya (POAK) and the Kenya Independent Petroleum Dealers Association (KIPEDA) urged independent petrol stations to suspend purchases from suppliers allegedly charging above the gazetted wholesale prices.
The associations said some independent stations were already experiencing stock-outs, while others risked closing because they could not afford to buy fuel at the prices being charged by certain suppliers.
The dealers claimed the problem began on October 15, when the latest fuel prices took effect. They also said they had raised complaints with EPRA and the State Department for Petroleum over the alleged violations.
Wholesale price caps under the October pricing period have been set by EPRA at Ksh211.80 per litre for Super Petrol, Ksh212.60 for diesel, and Ksh204.79 for kerosene.
However, the independent dealers claim that the fuel being supplied to them was being sold beyond this price range, posing problems for them as well as making it difficult for them to access petroleum products.
This comes after EPRA decided to increase pump prices for the October 15 to November 14 pricing period. Super Petrol has seen an increase of Ksh12.93 per litre, diesel of Ksh9.90 and kerosene of Ksh28.49.
This is amid the suspension of the fuel price stabilization policy put in place to help protect drivers from soaring petroleum prices.
EPRA’s latest compensation arrangement is expected to address the additional costs faced by oil marketers supplying volumes beyond those included in the pricing calculations. However, the concerns raised by independent dealers over wholesale pricing and fuel availability remain central to the dispute.