Kenya Independent Fuel Dealers: EPRA Pricing Violations Spark Halt Threat

• Independent petroleum dealers in Kenya are threatening to suspend fuel purchases from oil marketing companies.
• They accuse OMCs of selling fuel above the maximum wholesale prices set by the Energy and Petroleum Regulatory Authority (EPRA).
• The Petroleum Outlets Association of Kenya (POAK) and Kenya Independent Petroleum Dealers Association (KIPEDA) issued a joint statement on October 27, urging dealers to stop buying overpriced fuel.
• EPRA had set Nairobi's maximum wholesale prices for the October-November cycle at Sh211.80 for petrol, Sh212.60 for diesel, and Sh204.79 for kerosene.
• Dealers claim OMCs ignored these limits since October 15, leading to squeezed margins, potential stock shortages, and risks of business closure for independent stations.

The ongoing practice of purchasing fuel above the regulated wholesale prices is severely compressing the profit margins of independent stations, leading to a precarious situation for many.

Independent petroleum dealers in Kenya have issued a stern warning, threatening to halt fuel purchases from oil marketing companies (OMCs) if the alleged practice of selling products above the Energy and Petroleum Regulatory Authority (EPRA) maximum wholesale price limits persists. This significant development stems from accusations by the Petroleum Outlets Association of Kenya (POAK) and the Kenya Independent Petroleum Dealers Association (KIPEDA) that current wholesale pricing practices are making it impossible for independent fuel stations to maintain profitable operations.

In a unified statement released on October 27, the two influential associations urged their members across the nation to cease acquiring fuel from any supplier found to be charging prices exceeding the officially gazetted wholesale thresholds. This collective action highlights a growing Kenya petroleum product pricing dispute, with independent dealers asserting that the alleged overpricing by oil marketing companies is directly impacting their financial viability and threatening their continued existence in the market.

The Energy and Petroleum Regulatory Authority (EPRA) plays a crucial role in regulating the petroleum sector, including setting the maximum retail and wholesale prices for fuel products. For the October-November pricing cycle, EPRA published these limits on October 14. Specifically, for Nairobi, the maximum wholesale price for super petrol was set at Sh211.80 per litre, diesel at Sh212.60 per litre, and kerosene at Sh204.79 per litre.

However, the independent dealers contend that oil marketing companies overpricing Kenya's fuel market have disregarded these established EPRA wholesale fuel price limits Kenya since the new prices became effective on October 15. The associations reported that they had brought this critical matter to the attention of both EPRA and the Ministry of Energy, yet by October 27, no enforcement action had been initiated to address the alleged violations.

The ongoing practice of purchasing fuel above the regulated wholesale prices is severely compressing the profit margins of independent stations, leading to a precarious situation for many. Some outlets are reportedly grappling with stock shortages, while others face the imminent risk of operating at a loss or even permanent closure. This situation not only jeopardizes the businesses of Kenya independent fuel dealers but also raises concerns about consumer protection, as it makes it increasingly difficult for these retailers to sell fuel within the legally mandated price caps.

POAK and KIPEDA have explicitly called upon EPRA and the State Department for Petroleum to take decisive action against any companies found to be in breach of the pricing regulations. Emphasizing that independent outlets constitute a substantial segment of Kenya's fuel distribution network, the associations warned that a prolonged disruption in their operations could significantly impact the overall availability of fuel across the country. Despite the escalating tensions, they affirmed their readiness to engage in discussions with both the government and the regulator to find a resolution to this critical dispute.

Lawyers advising oil marketing companies in Kenya should review their clients' fuel wholesale pricing practices against EPRA's gazetted limits to ensure compliance and mitigate potential regulatory enforcement actions or disputes with independent dealers. Compliance officers should monitor EPRA's response and any subsequent changes in petroleum pricing regulations.

Source: Original reporting via Capital FM