Nairobi — Prices for petroleum products are expected to go up by at least a shilling a litre after the government sanctioned an Indian firm to collect inspection fees on behalf of the Kenya Bureau of Standards.

Oil companies decided to pass the cost of the inspection on to consumers after resisting in vain a move by Geo Chem Middle East to carry out a second inspection of their products.

And last Thursday, Geo Chem went to the Kenya Petroleum Refineries Limited (KPRL) and sought to impose charges on refined products. KPRL managers were at a loss as the firm is supposed to carry out inspection of the imported material (in this case crude oil) only.

A flurry of letters between the oil companies, Kenya Revenue Authority and Kebs failed to resolve the dispute that has moved to court. The companies had threatened to stop importing petroleum products until the government resolved the issue.

A notice by KRA saying it would start collecting the petroleum inspection fees from March 1, 2010 led the oil firms to pass the cost on to consumers.

The oil firms, through Oilibya managing director Kamel Jarnaz, protested the move, saying it was tantamount to double inspection as their products are already inspected by two private firms, SGS and Intertek. "We are yet to get any report on the tests carried out by Geo Chem other than invoices," said an official of one of the companies.

They say the fees would raise their costs. But Geo Chem spokesman in Mombasa Abdulsamad Ali accused multinational firms of refusing to remit the fee for testing and certification for the past six months. "The cost is less than 35 cents per litre, a value much lower than the Sh3-10 loaded per litre by the petroleum dealers," Mr Ali said.

Geo Chem said the quality of fuel in the country has improved since they started inspecting petroleum products. But industry sources disputed the assertion, saying KRA was using reports prepared by SGS and Intertek to collect revenue from them. Last October, the Petroleum Institute of East Africa (PIEA) sought the intervention of Prime Minister Raila Odinga.

In a letter to the PM, PIEA general manager Wanjiku Manyara said the oil sector was looking forward to a ministerial stakeholders' forum where they would thrash out all the issues affecting the sector, including the Geo Chem deal. The fact that the oil companies proceeded to court is testimony that the discussions did not bear fruit.