Shell cuts Kenya fuel price by Kshs 15

Shell Kenya on Monday announced a Kshs15 (Ushs375) per litre reduction on all its petroleum products, a move that was expected to make the other industry players in the country who had defiantly failed to lower their prices to rethink their positions.

In a statement to the press signed by the country chairman of Shell Kenya, Ahmet Erdem, the firm said this was in line with the global slump of crude oil prices. Reports from Kenya said the decision put pump prices of petrol at Shell-branded stations Kshs78.80 (about Ushs1,970) down from the previous Kshs93.80.

The decision comes amid growing suspicion in Uganda that oil dealers are deliberately keeping fuel prices high. Shell Uganda Chairman Ivan Kyayonka yesterday said he was in a meeting out of the country and could not readily comment on the developments in Kenya.

At the end of last week, a barrel of crude oil was selling at an average of $47.29, according to the Organisation of the Petroleum Exporting Countries (Opec) basket price. The prices have come down more than 150 per cent from the wild $147 per barrel they were selling several months ago.

The move by Shell Kenya came as Energy Minister Daudi Migereko told Parliament on Monday evening that the deepening fuel crisis in the country has forced government to engage Kenyan authorities in diplomatic talks expected to boost the nation’s fuel supplies. “Government is negotiating with Kenyan authorities with a view of ensuring Kenya Pipeline Company depots open for longer hours in order to load more trucks in view of the axle load limitation,” he said.

Mr Migereko was yesterday unavailable for comment on the latest developments in Kenya. However, the State Minister for Energy, Mr Simon D’ Ujanga, told Daily Monitor sister radio KFM last week that the government would only consider fuel prices as unacceptable if they spilled over Shs3,000 and Shs2,600 for petrol and diesel, respectively.

All oil dealers in the country are currently selling petrol at more than Shs2,500, with Shell Uganda having the lowest price for petrol at Shs2,600 while some are selling at Shs2,850. Diesel is selling at more than Shs2,000. However, Shell does not sell petrol during day time.

Uganda suffered a fuel crisis at the beginning of the year after the fuel transportation route was cut off by the post-election violence in Kenya. The country again started experiencing fuel shortage in September.

Explaining the shortage to Parliament on Monday, Mr Migereko said the introduction of three-axle weight limit in Kenya in October has resulted in fuel tankers carrying reduced quality of fuel from 42,000- 44,000 litres down to 30,000-35,000 per trip.

“Kenya pipeline has been undergoing rehabilitation and capacity enhancement since early 2007. As we speak now, the engineers are trying to install new pumps on the Mombasa-Nairobi pipeline,” Mr Migereko said in his statement. “When installation is completed, the pumping capacity will be doubled from the current 440 cubic metres per hour to 880 cubic metres per hour.”

Mr Migereko told MPs that among other measures to improve supplies and bring down prices, the government has asked oil companies in the country to increase the number of trucks lifting their fuel from Kenya to make for lost volumes due to axle limit requirements.
As a measure to curtail the fast-spreading fuel shortages, Mr Migereko told Parliament that the government was considering extending incentives to oil companies which use the Dar-es-Salaam route. “We want the landed price to be competitive with the products imported through Kenya and this will help us double supplies,” he said.

Mr Migereko said during negotiations with Kenya, the government requested Nairobi authorities to permit loading by road trucks in Mombasa and Nairobi for all companies, the same way it has granted to Shell Uganda for diesel for power generation. Kenya’s Energy Minister Kiraitu Murungi says their government is in the process of introducing limited price controls in the sector to protect consumers.

According to Mr Murungi, the controls will come into force in January at the expiry of 40 days following the publication of control recommendations by the Energy Regulation Commission.

When Daily Monitor contacted Mr D’Ujanga on whether the government was considering measures similar to those adopted by the Kenyan government, the minister said his ministry needed time to study the developments in Kenya.

“I haven’t got details on the Kenyan situation but I will study their proposals and then we shall comment on the matter at an informed point of view,” Mr D’Ujanga said.

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Alnadaby said:

GBP Tanzania,Moil have just reduced the diesel price in Mwanza City to Tshs.1700/- per litre.It is hoped that within a week or two it will go down to 1600/-per litre.

It is rather trange that the reduction of the price has not yet had an impact on the price of other commodities.

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