Local oil marketers have been hit with fines for fuel that has overstayed in the storage facilities of the Kenya Pipeline Company (KPC) amid hitches in selling fuel in the region.
Through their lobby, the Oil Tactical Exchange of Kenya (Otek), the marketers on Wednesday pleaded with the KPC to waive ageing penalties for the period between last June and March this year, in a bid to protect them from a financial hit.
The lobby cited loss of the Ugandan market after the nation started directly importing fuel, coupled with difficulties in accessing the Democratic Republic of Congo and South Sudan, including dollar hitches in the latter, have forced them to delay evacuating product from KPC’s system.
All oil marketers are required to evacuate product from KPC’s network within 26 days, after which a daily fine of $2 per cubic metre is applied.
“As a partner and stakeholder to KPC, we request all waivers of this ageing penalty from June 2024 to March 2025,” said the lobby in a letter to KPC dated April 28, 2025.
“The industry has faced a lot of challenges from the loss of the Ugandan market to insecurity in DR Congo, South Sudan and scarcity of dollars in South Sudan, which has affected payment. There is also the issue of the rainy season in Congo.”
The KPC has yet to respond to the application for the waivers. The law allows the company to waive ageing penalties of up to Sh100,000, while those above this amount can only be waived by the Energy minister with concurrence from the Treasury.
The total value of the fines was not disclosed, but KPC has raked in huge amounts from oil marketers for products that have overstayed.
The lobby said payment of the fines would significantly hit its members, given the thinning sales.
Local oil marketers lost a considerable market from last year when Uganda National Oil Company Limited started directly importing fuel under a deal with Vitol Bahrain. The deal means oil firms cannot directly sell fuel in Kampala.
Additionally, heavy rains in the DRC left the country’s dilapidated road network unusable, disrupting the movement of trucks transporting fuel to the country.
Congo and South Sudan have also been hit by a resurgence of civil wars, further crippling movement.
The KPC collected Sh432.67 million in fines for overstaying product in the year ended June 2024, a 60 percent drop from the Sh1.08 billion a year earlier.
Fines for products that have overstayed in the company’s system are recognised as a revenue stream in the books of the KPC.
Ageing penalties were introduced in 2017 in a bid to curb continued malpractices where traders or oil marketers would stockpile products, fuelling speculation on retail prices. The fines are also meant to encourage faster evacuation of fuel and ensure that KPC has enough capacity to receive cargoes for the following month.
