Kenya: Gov’t Orders Firms Linked To Substandard Petrol Imports To Withdraw Invoices, Export Fuel

The Kenyan government has ordered One Petroleum Ltd, the company at the centre of a substandard petroleum importation scandal that resulted in the arrest and resignation of three senior government officials, to withdraw its invoices and export the product out of the country, stating that the shipment posed a risk to fuel supply stability and would have significantly increased pump prices.

Mr Mohamed Liban, Principal Secretary for the State Department for Petroleum; Mr Joe Sang, Managing Director of KPC; and Mr Daniel Kiptoo Bargoria, Director-General of the Energy and Petroleum Regulatory Authority (EPRA), resigned after they were arrested last Thursday for breaching procurement procedures in the importation of substandard petroleum products into the country.

A statement issued by the Ministry of Energy and Petroleum on Tuesday, April 7, said Kenya entered into master framework agreements on March 10, 2023, for the supply of super petrol, diesel, and jet fuel/kerosene under a government-to-government (G-to-G) arrangement with Aramco Trading, Fujairah FZE, ADNOC Global Trading Limited, and Emirates National Oil Company (Singapore) Private Limited, anchored in the Petroleum (Importation) Regulations, 2023.

The ministry said the arrangement has supported the steady supply of refined products locally and regionally and helped protect foreign exchange stability. It added that the framework has also enhanced price stability and the integrity of product quality along the supply chain.

However, it said a 60,000-metric-tonne consignment of super petrol was recently imported into the country “in contravention of the procedures” set out under the G-to-G contractual framework with international suppliers.

The ministry said the shipment was priced at Ksh198,000 per metric tonne, compared to Ksh140,000 per metric tonne under the G-to-G arrangement—an increase of Ksh58,000 per metric tonne—which it said would have resulted in an approximate rise of Ksh14 per litre in pump prices on that consignment alone.

“Consequently, the Government, through the Ministry of Energy and Petroleum, and in addition to the measures already undertaken, has now directed that,” the statement read, before outlining actions to be taken.

The ministry said One Petroleum Ltd, which it identified as the importer that invoiced oil marketing companies, was directed to immediately withdraw all invoices and issue credit notes.

It further directed that oil marketing companies should neither pay the invoices nor uplift the product from the consignment, and that One Petroleum should export the product out of Kenya as soon as possible.

The Energy and Petroleum Regulatory Authority (EPRA) was also directed to exclude the product from the monthly computation of petroleum product costs.

The government said it would remain vigilant to ensure that no individual, company, or stakeholder engages in artificial shortages or unjustified price increases, adding that the public will continue to be updated on fuel prices in the usual manner.