Shell petrol station kenya. [Photo/pendletonpanther.Wordpress.com]
The Kenyan oil marketers have asked the government to retain the price control system in the fuel following the government announcement on the abolition of the system.
The companies which are represented by Petroleum Institute of East Africa (PIEA), said that the system has worked for them and they have been able to predict their revenues.
They further added that the abolition of the system, will delay the efforts to open up industries for competition and will likely to exploit the consumer.
“We would rather have the controls in place as we can now predict our revenues and use the predetermined cash flow to secure bank financing and attract investors,” said PIEA chairman Powell Maimba.
The price control system which was introduced seven years ago by government saw the Energy review commission (ERC), reviewing pump prices every month based on the fluctuations in global crude oil prices, freight costs, the forex market and tax changes.
Earlier this week, the energy cabinet secretary Charles Keter announced the plans to remove the price control following the study by the commission that recommended the abolition of the caps.
Mr Maimba said that the Kenyan market has thrived under the system adding that the consumers have been able to get petroleum at lower prices.
Removal of the caps will greatly disadvantage the marketers smaller cargos separately, denying them huge discounts thus pushing up the fuel costs. Private marketers have also objected the introduction of the free market saying that large marketers will be favored and will use it to dictate oil prices.