Are Kenyan Cartels Out To Ensure That Fuel Prices Don’t Go Down?

By Soko Directory Team / March 31, 2020 | 4:04 pm



Fuel Prices

“As to why the fuel prices in Kenya are still above 100 shillings per liter despite the prices dropping tremendously across the world is beyond my economic imaginations. This is the time that Kenyans should be paying for fuel at the least price,” says Mr. John Njenga, a matatu owner from Thika, Kiambu County.

“The Kenyan energy sector is run and controlled by powerful cartels. They are so powerful that anyone who tried to stand on their way is either send into exile of 6-feet under,” says another businessman who owns a petrol station along Outering Road.

The truth is global fuel prices have dropped and as such, one would expect the same to be replicated across Africa and Kenya in particular. But no. Kenyans are still paying through the nose as the rest of the world cuts down on prices. Very few are willing to question this because of the ‘powerful’ cartels who want to capitalize on global low prices reap big from poor Kenyans.

On Monday, the price of crude oil around the world fell to an 18-year-low as the deadly Coronavirus continues to spread around the globe. Market analysts say the prices are set to fall further as Saudi Arabia steps up production that will flood the global market with crude oil.

According to BBC, Brent crude fell to 22.58 US dollars per barrel on Monday, the price that was last witnessed in the year 2002. The price of crude oil in the US West Texas Intermediate fell below 20 US dollars per barrel, the lowest in 18 years after a drop of more than 6 percent.

Global fuel prices have dropped in the past months as fuel companies cut back production with some closing down with the remaining ones flooding the market. The price also dropped, at one time by 30 percent following a price war between Saudi Arabia and Russia with Saudi Arabia doubling production, hence flooding the market.

In most African countries, including Kenya, the price of fuel is still high with the global drop having little to no impact on the people in terms of prices. At the time that global crude oil prices dropped by 30 percent, Kenya reduced the price of refined fuel products by less than two percent with the same having no impact on the common consumer.

As this continues, it is emerging that Kenya indigenous petroleum companies are fighting off the ministry of Petroleum and Mining on costly February fuel products set to be accessed in April 2020.

According to those following up on the matter, the ministry is intimidating any local company that dares to challenge the decision despite being contrary to Kenya Open tender system clause 10.1 1 on vessel pricing.

Kenyans are expected to shoulder the heavy price to the tune of 2 billion shillings during these difficult times of economic lockdown. If you thought fuel prices will be coming down soon in Kenya, you are in for a rude shock.

Vessel K08 of March pricing has already discharged while k07 was deliberately delayed to benefit from the falling oil prices loaded 6th march but prices February plates average. The supplier has not responded to all emails sent seeking clarification on the analogy of February. The differential price is 21 shillings per liter eroding all the profits Kenyans could have gained from the falling crude prices.

Word has it that the ministry has threatened to suspend for 6 months any company that refuses to pick its share of expensively priced products contrary to OTS provision clauses 19.0.

It is obvious that the prices of fuel in Kenya will not be coming down any time soon? But why? Who will stand up for Kenyans? Who will protect the rights of poor consumers?





About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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