Nairobi — Pump prices stayed high on Tuesday a day after the government suspended the controversial petroleum inspection fee blamed for the increase.

Marketers said price review was being held back by uncertainty in refunds of over Sh100 million collected as fees at the rate of 0.675 per cent of cost, insurance and freight of crude oil and imported refined fuel.

It emerged that the new fee would cost oil companies Sh2.5 billion annually, up from Sh8 million, prompting them to increase fuel prices to pass the cost inspection by Geo Chem Middle East to consumers.

"Kenya Revenue Authority has not given a timeline for refunds after receiving fees on behalf of Kenya Bureau of Standards," said an official who requested not to be named.

Oil marketing companies said getting reimbursement from KRA, which started collecting the fee on March 1, was tedious and technical committee on fuel inspection constituted on Monday had not worked out the refund modalities.

Kebs in July 2009 contracted Geo Chem Middle East as a fuel inspector despite Public Procurement Administrative Review Board annulling the tender.

"The effect will be noticed in prices next month. The fees was paid on recently imported consignments," said Metro Petroleum Managing Director Bill Rotich.

He said, though, the reprieve for cheap fuel may be shortlived with international crude oil prices rising to above $80 a barrel.

Meanwhile, Geo Chem has defended the contract, arguing that keeping standards was Kebs' mandate.

Geo Chem media spokesman Abdulsamad Ali said 0.675 per cent fee would ensure only genuine oil enters the country.

He said in a statement inspection companies work for the market forces and not for the government.

"In practice standard is a system or product that has achieved a dominant position by public acceptance or market forces, such as early entrance to the market."

He said in 2008, over Sh50 billion worthy of petroleum products was not accounted for.

He added that Geo Chem carries out tests on more than 24 parameters as opposed to about five by its competitors SGS and Intertek.

(Additional reporting by Kenneth Ogosia)