New regulations have been released to govern tenders on import of oil in the wake of a botched supply of aviation fuel.
The
new rules, which were agreed on Thursday by the oil industry, Ministry
of Energy officials and the industry regulator, Energy Regulatory
Commission, are to be gazetted by the Energy Cabinet secretary to become
law.
Bidders in the Open Tendering Sytem will
henceforth be required to have been trading locally for the past two
years. They must also service a requirement of one million litres of
line fill/ dead or reserve stock at the pipeline tanks.
“We
need proof of trading in petroleum products in the local market for two
years without default as off takers/ buyers during this period,” said
the letter on the proposed rules.
This, coupled with
the perceived issue of double licensing, also came under review
following the current industry scare where Kencor Petroleum Ltd, with an
export licence, could still win import tenders on behalf of all Kenyan
firms despite it not having a local footprint.
The
default penalty was also enhanced to $20 per tonne — double the current
rate — while delayed deliveries will attract a $10 per tonne fine per
day.
“The performance bond will be cashed in the event
of default in cargo delivery and where an emergency cargo has been
called. The industry’s oil tankers’ scheduling committees will determine
the default and need for emergency tenders,” the rules read in part.
If
performance is not available, the supplier is considered to have
defaulted and a fresh tender will be called. The defaulter will be
locked out of supply.
“KPC will withhold the line fill
in the event of potential liabilities for any bidder who withdraws
their bids before the offer validity,” says the proposed rules seen by
the Nation.
Three years ago, State-owned National Oil
Corporation of Kenya messed imports of diesel to the country, with
consumers being forced to shoulder a $10 million (Sh88 million) burden.
This prompted rivals to push for higher penalties, meaning only firms
with good financing and supply lines would tender.
It is understood that another import firm also defaulted on its cargo requirements last December.
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