Business Daily
Date: 15.05.2015
Page 14
Article size: 141 cm2
ColumnCM: 31.33
AVE: 59533.33
Fix the entire fuel supply
chain once and for all
T|ie recent verbal exchange be­
tween oil marketing compa­
nies, the Ministry of Energy
and the Kenya Pipeline Company
(KPC) regarding petroleum short­
age in Nairobi and parts of Western
Kenya does not in any way help inno­
cent motorists who suffered anxiety
and wasted time while looking for
fuel. It only points to a dysfunctional
system that requires urgent fixing.
On the one hand, oil major Shell
has claimed that the nearly two­
week fuel outage that it suffered at
its pump stations was the result of
unfair allocation of space at the KPC
storage tanks.
On the other, KPC has sought to
deflect blame by arguing that allo­
cation of space at its storage tanks
is done through a consultative proc­
ess that is controlledby the oil mar­
keters themselves. The Ministry of
Energy has pointed a finger at one
of the major oil marketers, accusing
it of refusingto sell fuel to Shell and
instead opting to offload to smaller
country to the brink every now and
then. The complaints about space
allocation at KPC's storage tanks are
not new. For many years, established
oil marketers with nationwide retail
stations have complained that brief­
case companies take disproportion­
ately big space at KPC storage tanks
to their disadvantage.
The briefcase operations, which
have negligible or non­existent retail
presence, sit on the KPC space in an­
ticipation of more favourable prices
to offload their products, time and
again causing artificial shortages.
Fuel is the grease that runs the
economy, and the supply chain is
such a big deal that its disruption
could bring the country to a stand­
still. The Triton Scandal of about five
years ago, in which a company with
only a small retail network was al­
lowedto holdhuge stocks of petro­
leum at the expense of the major
marketers, is a perfect example of
howbad the situation can get if the
current space allocation arithmetic
firms that do not have retail outlets. is not changed. It is time nowto learn
The accusations and counter­accu­ from the past and establish trans­
sations did little to help the situation, parent storage, re­sale and retail
with the parties involved only tak­ chain that is tailored to benefit the
ing decisive action when it became economy over the long­term and not
clear that pump stations were run­ just afewprofiteers. The suggestion
ning dry and the shortage was start­ to allocate fuel storage space on the
ing to bite.
basis of oil marketers' capacity to off
Along­term solution must how­ take the products from KPC's tanks
ever be sought to avoid taking the maybe agoodstarting point.
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya