SABOTAGE: Vivo says fuel shortage results from unfair business practices

11 May 2015 | by Kelly Simiyu
 SABOTAGE: Vivo says fuel shortage results from unfair business practices

Vivo Energy Kenya has blamed the shortage of fuel at all Shell fillings stations in Nairobi and Mount Kenya region on unfair fuel allocation formula to Kenya Oil Marketing Companies. Vivo Energy Kenya has said that the disruption to supplies of Super petrol at Shell service stations in Nairobi and the Mount Kenya region.

Vivo Energy reassured customers that it has sufficient fuel in country for Shell Petrol Stations’ needs stored at Kenya Petroleum Refinery Limited tanks in Mombasa and are making efforts to transport it by trucks and rail wagons from Mombasa.

“Vivo Energy reassures customers that we have sufficient fuel in country for Shell Petrol Stations’ needs.The fuel is presently stored at KPRL (6 million litres of petrol) and VTTI (13 million litres of Diesel) tanks in Mombasa. We are making all efforts to transport the product from Mombasa using trucks and rail wagons to meet the growing demand for the high quality Shell fuels,” Vivo Energy Kenya said in a statement.

Vivo Energy has appealed to Kenya Pipeline Company, Ministry of Energy and Petroleum and the Energy Regulatory Commission to allow the company to transport the fuel through the pipeline for faster availability to customers.

The company said there will be petroleum product in stations from 11th May 2015 and supply of all fuel products will return to normalcy by13th May 2015.

Vivo Energy said Kenya has 77 licensed OMCs and only eight have an established retail network, who between them command 97% of Kenya’s retail market share. However, these eight OMCs are only allocated 56% of PMS that enter the country.

“The remaining 44% of PMS is allocated to the other 67 OMCs, who have not invested in a retail network and who between them command just 3% retail market share. These OMCs trade in PMS and will typically only sell to the eight OMCs when the price is right for them, resulting in insecurity of supply for Kenyan customers and potential ‘stock outs’ where retailers do not have fuel to sell. The situation has been made worse since the price of crude oil fell in mid-2014 as these 67 OMCs have been reluctant to sell their share of PMS. Fuel allocation is today unfair by allocating 44% ullage to 67 OMC that only have 3% retail market share,” Vivo said.

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