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"id": 49431,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/49431/?format=api",
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"type": "speech",
"speaker_name": "Mr. Murungi",
"speaker_title": "The Minister for Energy",
"speaker": {
"id": 93,
"legal_name": "Kiraitu Murungi",
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"content": "(v) I was requested to give details of the petroleum products in terms of volume held by the Kenya Pipeline Corporation (KPC) tanks and, more specifically, the volume meant for transit against the volume meant for fuel for local markets. Mr. Temporary Deputy Speaker, Sir, in response, allow me to make the following Statement. The Government is aware that there have been fuel shortages in Nairobi in the last five days which have greatly inconvenienced motorists and consumers. The Government is also aware that fuel shortages have far reaching implications for various sectors of this economy. I would like to clarify at the very beginning that there has been enough diesel and kerosene in the country during this entire period. The fuel shortage only affects one product; that is, super petrol. I would like to inform the House and Kenyans at large that this crisis is very quickly coming to an end as we have now got adequate supply of super petrol in the country and we expect that by tomorrow, all the petrol stations within Nairobi, where there has been a shortage, to have sufficient super petrol. Mr. Temporary Deputy Speaker, Sir, I would like to appeal to Kenyans not to engage in panic buying, which is creating the long queues that we are seeing, with people filling both their cars and jerricans that they take to petrol stations because there is no cause for alarm. We have enough products for tomorrow and the day after tomorrow. So, let them buy what their cars require. Mr. Temporary Deputy Speaker, Sir, there are about for causes of the shortages. Every month, the Ministry runs what we call âindustry tenderâ through an open tender system. In the March tender, there was under-supply of super petrol to the tune of 7 million litres. The importer was not able to bring, as part of that tender, 7 million litres and that reduced the quantity of super available in the market. We expected during the month of April to receive 8 million litres of super petrol from the Kenya Petroleum Refineries (KPRL). However, due to a technical problem at Kiambere Power Station, which supplies power to the Coast Region and the KPRL, there was a blackout. As a result of this power failure, the KPRL was shut for seven days. As a result of that shutdown, the KPRL up to now has not been able to produce or deliver into the market, the expected 8 million litres of super petrol. So, we have not received that product to date. On the import cargo for April, we imported 29 million litres of super petrol. This cargo was delayed in its arrival by five days. The ship was supposed to discharge on 21st April, but it was only able to do so on 27th and 28th of April, 2011. This cargo was inspected for its quantity and quality last Friday, 29th April, 2011, and because of the weekend and the holiday, the taxes could not be paid to the Kenya Revenue Authority (KRA) on time and, consequently, the products could not be released to the market until those taxes were paid. The taxes have now been paid and from the evening of 3rd May, that product was available and released to the market. That is why we are saying that we now have sufficient products available in the market. Mr. Temporary Deputy Speaker, Sir, it was not only super petrol which was available. There was availability of some products within the pipeline system during this period but between 29th of April and 2nd of May, the oil marketers did not request for any pump over of the products from the pipeline system into their storage tanks and, therefore, whatever they had ran out. We suspect that this could have been caused by an action we took as a result of the high prices that had caused some demonstrations in town over a week ago. Mr. Temporary Deputy Speaker, Sir, you recall that the Deputy Prime Minister reduced the tax on both diesel and kerosene. Once the tax was reduced, thee oil marketers waited for the legal notice to reduce the tax and because they wanted to pay less tax to the KRA, they held the products without picking them from the pipeline system and the diesel which was in the pipeline system congested the system, therefore, delaying the delivery of super petrol from Mombasa to Nairobi. The taxes have now been paid as a result of our intervention and things are moving. On the measures we are taking to ensure sustainable availability of fuel products, we are not sure whether the KPRL will be able to supply us with super petrol to replace the 8 million litres that we did not get last month. Mr. Temporary Deputy Speaker, Sir, my Ministry has, therefore, decided to float a special tender for super petrol of eight million litres to replace the one that was coming from refinery. The special tender will be floated on Tuesday, next week, to ensure that there is continuous flow of the product. To avoid clogging of the Kenya Pipeline Company (KPC) system, the Ministry, in consultation with the Kenya Revenue Authority (KRA), has requested the KRA to reduce the period of tax payment for oil marketers from 30 days to 10 days. In the past, while the products come into the pipeline system, we were allowing 30 days within which to pay their taxes, the financiers and to take out the products. That meant that an oil marketer could import products and store them within the pipeline system for 30 days. The 30 days ended up clogging the system. We made a decision to reduce that period from 30 days to 10 days. This will enable faster flow of the products within the pipeline system. Hon. Members are aware because I have been talking about this before; we have been running, almost on permanent crisis in the petroleum subsector. We operate on almost a hand to mouth basis because this is one of the few countries of the world where there are no strategic reserves. If one ship does not arrive, the effect of that cargo is felt, not only in Nairobi, but all the way to Eldoret. The world is becoming more uncertain, with pirates and war among other things. I think time has come now for us to establish a strategic storage facility of some flows to cushion us from interruptions and erratic supply of petroleum products in this country. We had way back on 2008, after the post election violence asked ourselves; supposing there was a lot of violence in Mombasa and products could not be brought to Nairobi, what would happen? Even the military would not move. We decided to establish strategic reserves for the country. We thought that we could have a strategic cover of 90 days. However, when we presented the Bill to the Treasury, because the amount was quite astronomical, almost Kshs80 billion and Kshs4 billion for building storage facilities, the Treasury did not have the resources to support that exercise. Therefore, it was shelved. We have gone back to the Treasury and told them that even if we cannot have one for 90 days, why can we not have one for five or six days, so that we have one week or a few days of cushion because we do not know what is likely to happen and the supply can be erratic? This discussion is continuing and my officers and Treasury officers have agreed to meet next week to see what possibilities could be available within the budgetary process. We have also been facing a challenge because there is only one jetty supplying the country, Uganda, Rwanda, Burundi, DRC Congo and parts of Southern Sudan. We can only offload one ship at a time. The Departmental Committee on Energy, Communications and Information visited the installations and came back and gave a report to this House. They said it is a very dangerous operation we are doing; it was high time we did something else. Building another jetty would require to dredge the port so that larger ships can come in. That would also require a lot of money. We are talking with the Treasury to see if we can introduce a SBM, so that we just connect a pipe from the port, all the way to the deeper sea where large vessels can offload from. Instead of the ships coming to the port, we pump products from the ships to the tanks. This is a project that we have decided to fast track with the Treasury. We believe it will solve the problems we are facing. We also have problems of storage. When the pipeline system is clogged, we cannot remove those products because there is nowhere to take them. The pipeline shuts sometimes because until those products are removed, we cannot pump more products from Mombasa. Therefore, we are discussing with the private sector to establish storage tanks along the pipeline. We are looking at places like Konza, Industrial Area, Nakuru and Mtito Andei, among other places. Those are some of the structural constraints that we are seeking to address, so that we can increase the flow of petroleum products and, in the medium term, prevent the recurrence of what we are talking about. Mr. Temporary Deputy Speaker, Sir, I was asked what punitive measures we will take against oil companies that could have caused the current shortage. I have advised the Energy Regulatory Commission (ERC) to investigate and establish whether any of the oil companies have artificially caused the shortages we have experienced in Nairobi. If we find any company operating in such a manner, in breach of the Energy Act, we will take the steps and apply the penalties we are allowed to take by the Energy Act. This means that we can impose fines, suspend or cancel the licences of that company. So, after these investigations, if any company is found to have caused this shortage and in breach of the Energy Act, action will be taken in accordance with the Act. Regarding Gulf Energy, it is true that they won an industry tender for the month of April. However, it was not for 70,000 metric tonnes. The tender was for the supply of 57,000 metric tonnes of diesel. As I said at the beginning, we have no problems with the supply of diesel. The problem we had was with the supply of super petrol. Therefore, the Gulf Tender of diesel has no contribution, at all, in the current super shortage. The Gulf cargo was discharged on 16th April, 2011. It has not caused any fuel shortage in Nairobi or elsewhere. I would like to confirm that no buyers have refused to accept products from Gulf Energy. Lastly, I was asked to give details of petroleum products in terms of volume held by the KPC tanks and more specifically, the volume meant for transit against the fuel meant for the local market. The details are as follows. Within the KPC today, we have diesel of 99,000,339 litres. Of that amount, the volume meant for the local market is 64,600,000 litres. The amount meant for export is 34,749,000 litres. Regarding super, we have, in the KPC 66,074,000 litres. Of that amount, 43,598,000 litre are meant for the local market and 23,476,000 litres for the export market."
}