State-owned petroleum marketer the National Oil Corporation of Kenya (Nock) is facing intense industry pressure after it botched up diesel imports for the current peak demand linked to the planting season.
Industry insiders said Nock officials went into a frenzy of damage control activities at the weekend as market data pointed to a looming shortage that is expected to add inflationary pressure on the price of diesel in coming weeks.
Nock is said to have stunned the industry last month with its bid prices which rivals say were nearly a third of its competitors.
Part of the consignment of about 116,236 tonnes of low sulphur diesel for domestic use and re-export to neighbouring landlocked states was to land at the port of Mombasa last Friday but by Monday, there were no indications as to when the vessel would arrive.
Some industry executives said their stations had run out of diesel stocks. Diesel is mainly used to fuel trucks, bus fleets, construction and farm machinery.
“We will run dry by Wednesday this week. We are desperate for the product,” said an industry executive with one of the leading oil marketers.
Nock’s acting managing director Sumayya Hassan did not respond to queries on the expected date of arrival of the vessels.
The second batch of the consignment is expected to arrive next Tuesday.
Last week, the Ministry of Energy stepped into the scene to calm the marketers’ nerves with assurances that the vessel would arrive last Saturday.
Ms Hassan is also reported to have told a meeting of chief executives called to review the terms and conditions for the OTS system that the supply would arrive as scheduled but that had not happened by close of business on Monday.
“The nominated ship has not called on the ports that are listed. They are not in any maritime list,” said another industry source. “We are waiting for the Ministry of Energy’s guidelines on this,” he said.
Fail to deliver on the contract will earn Nock heavy penalties from the Energy ministry – which awards the monthly import contracts.
Change of delivery dates is likely to result in an increase in invoice value in what is referred to as “contango games”.
Traders use the term to describe deliberate playing with the delivery date so as to profit from the price differential.
Failure to import the cargo within the stipulated dates attract a $2 million (about Sh160 million) penalty.
