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Government publishes new regulations to have National Oil import 30 percent of petroleum products

Government publishes new regulations to have state-owned National Oil import 30 percent of petroleum products into the country.

In response to a drive for petroleum products from Saudi Arabia, the State has published legislation to facilitate government-to-government agreements on the importing of fuel.

According to the new regulations, the advantages of such accords would probably be passed on to consumers in the shape of lower pump costs.

Additionally, the legislation will allow the country to take advantage of favorable financing terms from suppliers.

“Recognising the need for a government-to-government arrangement for the importation of petroleum products which may enable the country to negotiate for discounts on product cost and freight while at the same time enabling the country to access extended credit periods from suppliers,” the rules state.

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“This will save the country from the current pressures on Foreign Exchange Reserves.”

Kenya is in talks to import a third of its fuel from the United Arab Emirates (UAE) on credit in efforts to cut the dominance of oil majors who have been blamed for fuel shortages.

The agreements will make it possible for the government-owned National Oil Corporation of Kenya (Nock) to import 30% of the nation’s diesel and gasoline requirements.

Nock will be required to sell the majority of the UAE shipment to small independent dealers because they have lately been cut off from the wholesale market, which is said to have played a role in the severe fuel shortage that recently put a halt to operations throughout the country.

The Petroleum (Importation) Regulations, 2022, published in the Kenya Gazette seeks to make key elements of the Petroleum Act, 2019 operational by making it a compulsory requirement to import petroleum products through the Open Tender System (OTS) for efficient planning and to enable the country to enjoy economies of scale.

The proposed regulations outline criteria for capacity allocation at facilities that import petroleum for common users, supporting equality, open access, and non-discrimination.

Petroleum Cabinet Secretary Davis Chirchir said a detailed review will be undertaken in five years to ensure the continued relevance of the regulations to the industry’s needs.

“The Energy and Petroleum Regulatory Authority has considered all the alternatives and notes that the proposed Petroleum (Importation) Regulations, 2022 have distinct advantages and hence recommends the passing and operationalization of the regulations,” Mr Chirchir said.

According to the Petroleum Ministry, the draft regulations have been modified to better match them with the terms of the Petroleum Act No. 2 of 2019.

Mr Chirchir said the proposed regulations seek to enforce the provisions of the OTS in ensuring that petroleum products are imported into the country in the most cost-effective manner.

“The regulations will promote transparency by laying bare all costs involved in the petroleum import process and hence ensure prudence,” he said.

Mr. Chirchir claimed that by combining and harmonizing the many legal notices pertaining to the importation of petroleum products, the proposed regulations will also bring clarity and simplicity. 

The adjustments are anticipated to benefit consumers by providing fair prices and a reliable supply of petroleum products, among other benefits.

According to him, the proposed laws will be beneficial to importers of petroleum since they will allow for economies of scale through the employment of bigger boats and shared import planning.

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