Fresh fears emerge over new increase in petrol prices
Fuel prices might not come down in June after all following decision by an oil marketer to charge higher than expected price for a new consignment imported this month.
Gulf Energy, which was in April contracted under the Open Tender System (OTS) to import a cargo of super petrol, has priced the consignment based on the high April prices.
This has resulted in a stand off with other oil marketers who insist that they will only take up their share of the consignment if it is priced using the much lower prices of May.
Price of crude oil has dropped by about $15 a barrel in the past month, up from $120 per barrel in April, they reckon is not reflective on the price on offer.
The international prices now average between $105 and $110 a barrel.
The cargo by Gulf arrived on May 20, and started discharging on May 21.
According to OTS rules, oil marketers bringing products before the 15th of the month can price them based on the previous month’s prices. Consignments coming after the 15th are priced according to the current month’s pricing of crude oil.
The decision to price the fuel consignment based on last month’s crude prices might be costly to Kenyans, who are already grappling with all time high retail prices for petroleum products.
“The importer has billed the industry on the basis of April 2011 prices as opposed to May prices, contrary to the OTS agreement for cargoes scheduled for arrival on or after the 15th of the month and against which the industry expected to be billed,” said one of the marketers in a letter dated May 26 to the Energy PS Patrick Nyoike.
SIGNIFICANT DECLINE
“In this regard and notwithstanding the supply situation, we are unable to accept what we have been invoiced and hereby notify you that we will not take up our share of the cargo based on any other pricing other than May 2011.”
The letter also alleges that the importer had deliberately delayed the loading of the consignment to enjoy benefits of reducing prices, but has failed to pass similar benefits to the industry.
The new development comes despite an assurance by the Ministry of Energy that pump prices would come down in June following the significant decline in price of crude oil this month.
