28 April 2008

Kenya: Strategic Fuel Reserve Planned

Nairobi — A petroleum strategic reserve stock, similar to that of cereals, will be set up to ensure constant supply.

In a Kenya Gazette notice dated April 25, 2008, Energy minister Kiraitu Murungi said the reserve stock would also rein in runaway petroleum prices and cushion the country from supply disruptions, both locally and internationally.

"It will ensure constant supply of the product and stabilise domestic prices of petroleum products," Mr Murungi said.

Unleaded premium fuel is now retailing at Sh100 per litre in the city centre, the highest price in the country's history. The high cost of fuel has also been blamed for the rising cost of basic commodities.

Mr Murungi said the strategic stocks would be procured by the National Oil Corporation of Kenya and stored by the Kenya Pipeline Company Limited. The initial quantity of fuel in the strategic stock shall be equivalent to 30 days of consumption and will be funded from money appropriated by Parliament in the 2008/09 budget.

"Procurement of additional stock, up to the optimal level of 90 days of consumption, shall be funded by monies to be appropriated by Parliament in subsequent financial years," said the minister, who also effected new regulations in the sector to ensure a constant supply of fuel.

Motor spirit

All importers of petroleum products intended for use in the country shall maintain at all times physical operational stock to be known as the minimum operational stock.

The minimum operational stock will be in quantities not less than those specified in the schedule by fuel companies.

The minimum stock for liquefied petroleum gas will be equivalent to 15 days of consumption, while that for petroleum motor spirit should last 20 days. Minimum stocks for industrial diesel should last 20 days, while that for heavy fuel stocks will be 25 days.

Any person who contravenes the new regulations shall be liable to a fine or jail term not exceeding two years or both.

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