The government last week amended the petroleum import laws and allowed Kenya Petroleum Refinery Limited (KPRL) to begin importing its own crude, process it and sell the refined product at a profit to the Kenyan market and for export starting July 1.

The move is expected to reduce the logistical costs substantially which will be reflected on the final product cost.

KPRL currently acts like a toll refinery where it processes crude oil on behalf of marketers for a fee.

This new arrangement has not augured well with marketers and consumers who said inefficiencies at the refinery led to high fuel prices. It is estimated that losses of about KES 2,496 a tonne of processed crude are incurred due to KPRL inefficiencies.

The move though allows marketers to buy products from other international refineries as opposed to the current structure that requires them to buy about 50% of their monthly demand at the refinery.  Marketers have argued that petroleum products processed at KPRL cost more than processed imports. Allowing marketers to import from cheaper international refineries might also lower fuel prices.

The Energy Regulatory Commission will still regulate pump prices.

Courtesy of the Business Daily.