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"id": 56326,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/56326/?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",
"slug": "kiraitu-murungi"
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"content": " Mr. Temporary Deputy Speaker, Sir, I also rise to support this Motion. In doing so, I want to sincerely thank the Members of the two Committees, including our very able Chairman, Eng. Rege, of the Departmental Committee on Energy, Communication and Information, for their detailed and very thorough Report. I also want to thank hon. Members for their very useful contributions and especially those who have continually spoken about the need for us to create a petroleum stabilisation fund to cushion ourselves against the erratic international oil prices. Mr. Temporary Deputy Speaker, Sir, as the Committee has correctly recommended, the Petroleum Products Quota Allocation Regulations of the year 2010 are not in breach of the Energy Act. Indeed, they are based on very sound policy considerations. I want to disagree with the Member for Voi on the reason as to why the NOCK was created. What the hon. Member said is only part of the reason. The main reason as to why the NOCK was created in the year 1981 was price stabilisation. Indeed, during that period, there was the international oil price shock, and one of the methods by which the Government responded was to create national oil companies. That was the primary reason as to why the NOCK was established in this country. However, if you look at its terms of reference, you will also see that what the hon. Member said was, indeed, correct. The NOCK was also intended to make sure that there are outlets for supply of petroleum products across the country. The reason as to why we passed these Regulations was to not only ensure that there was security of supply of petroleum products in this country but also to cushion Kenyans against exploitation through predatory pricing of petroleum products by oil marketing companies. This is not new. The biggest challenge we have been facing in this country is high energy prices. I am talking about high electricity prices and high petroleum products prices. The reason for the high petroleum products prices that we frequently experience in the country is that we are not totally in control of the upstream side of that industry. The country is captive to international crude oil prices and the geo- politics that affect them. Mr. Temporary Deputy Speaker, one year ago, for instance, nobody knew that governments which looked so stable, like Egypt, Tunisia and Libya, and others in the Middle East, would be gone in a matter of a few weeks. Nobody can foretell how long the piracy crisis on the Somali Coast is going to last. This piracy menace is also increasing petroleum prices by increasing insurance costs and freight costs, because some ships are avoiding the shorter routes and going through Madagascar, and others going all the way to Cape Town, to bring oil products to the East African ports. So, there is an international dimension to the issue of oil prices we are not in control of. The other structural constraint we have, and which we cannot deal with at the snap of our fingers, is the inefficiency in the oil refinery plant due to its dilapidated technology of the 1970s. We are trying to modernise the oil refinery. It requires a lot of money, and it will take some time. It is true that we do not have sufficient importation capacity because we have only one oil jetty, which the Committee Members have noticed, but we are addressing the issue through the NOCK, who have asked for expression of interest but, again, they have to work with the Kenya Ports Authority, and this will take some time to sort out. Mr. Temporary Deputy Speaker, Sir, we are encouraging private sector players to set up storage facilities across the country because the Governmentâs budgetary resources are not sufficient. There is a lot of competition for Government budgetary resources. The Internally Displaced Persons (IDPs) need budgetary support. Without rains, more money will be required for the importation of foodstuffs. We cannot compete effectively for budgetary resources. So, we are encouraging private sector players to come in and invest in petroleum storage facilities. I am painfully aware that the price of kerosene is hurting the ordinary men and women of this country, especially the poor. I have requested the Energy Regulatory Commission (ERC) to address this issue, because it is now reviewing oil prices. They normally review oil prices after every three months, but we have asked them to be doing so on a monthly basis, so that we can capture the actual market dynamics. So, this coming Friday, the ERC will release the new prices of petroleum products in the country. Mr. Temporary Deputy Speaker, Sir, we have requested the ERC to consult all the stakeholders in the oil sector. We have asked them to sit down with the oil marketing companies, because they have said that they are making losses. We have asked them to sit down with the Confederation of Trade Unions (COTU), who represent workers, as well as with matatu owners and leaders because high petroleum prices also affect the transportation costs for all Kenyans and lead to a rise in the cost of living. So, we have asked them to undertake very broad consultations, so that we can come up with prices that are affordable to the people, especially kerosene prices. So, the price regulation formula that was introduced is not strictly intended for price control. It is just a formula for tracking fuel prices to ensure that Kenyans pay the correct prices for the oil products that are imported into this country. So, if the international oil prices rise, the formula will show that there is a rise at the international oil market. If the transportation costs rise, that will also be captured in the formula. Mr. Temporary Deputy Speaker, Sir, there was a margin that we allowed of Kshs6, so that those companies can remain in business. Many companies are saying that they are not even making Kshs6. We want to follow them up to see whether they are actually making Kshs6 or they are making losses. If not, then some adjustments have to be made. So, I am not going to promise, because I will be telling a lie to Kenyans that come Friday, the petroleum prices are going to come down. Because of what has happened, there could very well be a further price increase in the prices of petroleum products, but whatever price it is, we are monitoring it to ensure that the oil marketing companies are not exploiting Kenyans and that when prices are supposed to come down, they come down and when they are supposed to go up, they reasonably go up. That is what we are doing. There has been a lot of inadequacies in infrastructure in this country. I think the reason is that there was some deregulation of the petroleum sub-sector for a long time. Then we have been living from hand to mouth as far as petroleum products are concerned. So, that is why there is talk about having strategic stock for the country. The reason why we are calling for a master-plan for the petroleum industry in this country is that we can project what is going to happen 10, 20 years down the line and we encourage investments in accordance with that national master-plan. That is the way to go. These kneejerk reforms are not going to help this country. We would like to request our Committee on Energy to continue working with us the way we have done. Let us share the pains together, but also let us share the ideas that could be incorporated into the petroleum industry master-plan, so that we can look into the future and deliver petroleum products, not only in Kenya, but throughout the region, on a more sustainable and affordable basis. With those remarks, I support."
}