HTTP 200 OK
Allow: GET, PUT, PATCH, DELETE, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept
{
"id": 194489,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/194489/?format=api",
"text_counter": 125,
"type": "speech",
"speaker_name": "Mr. Murungi",
"speaker_title": "The Minister for Energy",
"speaker": {
"id": 93,
"legal_name": "Kiraitu Murungi",
"slug": "kiraitu-murungi"
},
"content": " Mr. Deputy Speaker, Sir, last week, on Wednesday, 7th May, 2008, Mr. K. Kilonzo requested me to give a Ministerial Statement on the rising cost of fuel. He requested me to specifically tell this House:- (i) the cost of fuel in this country; (ii) the international price of fuel per barrel; (iii) how much the Government taxes the fuel coming into this country; (iv) what steps the Government is taking to ensure that it cushions its people from arbitrarily escalating prices; and, (v) whether there are any alternative sources of energy that Kenyans can use to avoid using a lot of money on fuel. Mr. Deputy Speaker, Sir, having said that, I beg to give the following Ministerial Statement. As hon. Members are undoubtedly aware, there is an unprecedented escalation in the cost of petroleum fuel here in Kenya and, indeed, in the rest of the world. We are experiencing the highest petroleum prices in the history of this country. I have been reading a report from the Organization of Petroleum Exporting Countries (OPEC), which is predicting that the price of crude oil could possibly rise from the current US$125 per barrel today to about US$200 per barrel by the year 2010, that is in the next three years. These sky-rocketing energy prices are caused by forces of supply and demand in the world oil markets. There is an unprecedented high demand for petroleum fuels in the global economy, particularly in China and India, which have continued to register very high growth rates. There is also low supply levels occasioned by a slow pace of fuel production from existing wells, reluctance by the OPEC members to increase their oil output, and a very slow pace in making new discoveries. Mr. Deputy Speaker, Sir, in Kenya, in the last 12 months, or so, the international price of murban oil, which is the main crude refined at the Kenya Petroleum Refineries Limited (KPRL) in Mombasa, has risen from US$62 per barrel to the current US$109 per barrel. This is an increase about 67.67 per cent. On 28th April, 2008, the West Texas Intermediate (WTI) crude oil, which is the critical bench market crude, hit-an-all-time high price of more than US$120 per barrel. A few day ago, on 8th May, 2008, it reached US$126 per barrel. Mr. Deputy Speaker, Sir, this very sharp rise in crude oil prices have translated into high consumer prices of various petroleum products in this country. The pump prices for petroleum products have risen by slightly over 25 per cent in the last 12 months. In March, 2007, the pump price for super petrol was Kshs76, and for diesel was trading at Kshs66 per litre. By last week, these prices had escalated to Kshs99 per litre and Kshs90 per litre respectively in Nairobi. Mr. Deputy Speaker, Sir, the taxes levied by the Government on petroleum fuels imported into this country have not been increased since June, 2006 when the Government increased the Road Maintenance Levy (RML). These taxes are currently as follows:- (i) super petrol, Kshs29.29 per litre; (ii) regular petrol, Kshs28.90 per litre; (iii) automotive gas oil, Kshs19.70 per litre, and (iv) kerosene, Kshs7.60 per litre. This is the amount we take contribute as the RML. Mr. Deputy Speaker, Sir, the Government liberalised petroleum prices in October, 1994 972 PARLIAMENTARY DEBATES May 13, 2008 with a view to inducing competitiveness in the market. Since then, oil companies have been setting the pump prices. Whereas it has been the custom that bulk consumers of petroleum products such as manufacturers are able to negotiate competitive prices, the fuel consumers in this country, particularly here in Nairobi, have not benefitted very much from this competition. This is because of the dominant presence of large oil marketing companies with cartel behaviour, especially here in Nairobi. Mr. Deputy Speaker, Sir, under Section 102(w) of the Energy Act which was passed in 2006, it empowers the Minister for Energy on recommendation of the Energy Regulatory Commission to determine retail prices of petroleum products. My Ministry is monitoring the situation on a daily basis with a view to establishing whether it warrants me to determine the retail prices under Section 102(w). Mr. Deputy Speaker, Sir, I would like to inform this House that if the situation warrants, I will take decisive action to protect the interests of Kenyans in this respect. The Government is concerned about high domestic prices of petroleum fuels as they adversely impact on the economy and, indeed, they are reversing the gains made in this country in the last five years. To address this challenge, the Government is already taking steps to strengthen the National Oil Corporation of Kenya (NOCK), so that it can become a major domestic player and a market leader in setting the prices of petroleum products in this country. In this respect, the Government has provided funds to NOCK to acquire 13 refuel outlets which were formally owned by British Petroleum (BP) Kenya Limited. It is in the process of facilitating NOCK to acquire a further 33 stations owned by SOMKEM Kenya Limited. We are on the look out for any other outlet which could be available for acquisition by NOCK. Mr. Deputy Speaker, Sir, my Ministry is encouraging all Government Ministries, departments and parastatals to purchase all their petroleum products from NOCK or its appointed agents in order to reduce the cost of oil supply. In this respect, it is hoped that expansion of NOCK distribution and refuel network will enable this corporation to play a significant role in the Kenyan market and help us to reduce domestic prices of petroleum products. Mr. Deputy Speaker, Sir, the Government has planned to establish a strategic petroleum reserve of up to 90 days of consumption with effect from July this year as provided for under the Energy Act No.12 of 2006 and the Legal Notice which I recently published in April this year, Legal Notice No.43 of 2008. These strategic stocks once procured, will be utilised from time to time to stabilise domestic prices and to ensure security of supply in the event of disruptions in the supply chain. Mr. Deputy Speaker, Sir, the long term solution to high petroleum prices for Kenya is to discover our own oil and gas reserves. The Government, through my Ministry, is intensifying research for commercial deposits of both petroleum oil and gas in this country. We have allocated various blocks in different sedentary (sedimentary) bases of this country to various exploration companies because the country is under-explored. We believe it is only a matter of time before we discover either oil or gas in view of this intensified activity. Mr. Deputy Speaker, Sir, I will also like to inform the hon. Members that there are no immediate viable alternative sources of energy which can significantly contribute or substitute liquid petroleum fuels in Kenya. However, the Ministry of Energy and other stakeholders are exploring the possibility of commercial production of biofuels which include biodiesel and the Directorate of Renewable Energy in the Ministry. We are treading very carefully in this area because the global bio-fuel strategy is facing major challenges of environmental degradation and escalating global food prices. Mr. Deputy Speaker, Sir, I would like the hon. Members to look at a lead article in the Time magazine of 18th April this year where they are talking about the clean energy made and they are saying that all that it is doing is to drive up world food prices, helping to destroy the Amazon and May 13, 2008 PARLIAMENTARY DEBATES 973 making global warming worse. So, we have to balance whether you want food or fuel. Mr. Deputy Speaker, Sir, I would like to take this opportunity to urge consumers of petroleum products in this country, not only to institute personal conservation measures, but to source their fuels from those companies which offer them lower prices at the fuel pump outlets like the NOCK. The price in Nairobi from NOCK is Kshs94 per litre whereas if you buy from other companies it is Kshs99 per litre. So, why should you go for Kshs99 when Kshs94 is available in the market? Mr. Deputy Speaker, Sir, similarly, we are urging large consumers of petroleum fuels such as manufacturers to negotiate competitive prices for biofuels delivered to their premises for better pricing. Mr. Deputy Speaker, Sir, lastly, I would like to urge Kenyans, especially the elites, to emulate the elites in India. We should avoid this culture of conspicuous consumption and learn to drive smaller cars like they do in that country. Thank you, Mr. Deputy Speaker, Sir."
}