PREVIEW
Nairobi’s relaxation of sulphur limits after it rejected a contaminated Gulf cargo suggests it was caught by the fall out from its UAE-linked fuel deals
The decision by ministers to waive the maximum sulphur limits on diesel and petrol imports for two months, just weeks after the Energy and Petroleum Ministry rejected a petrol consignment from the Gulf because of its high sulphur content underscores the government’s anxiety about fuel shortages from the Iran war.
The announcement on 30 April suspends a limit of 50mg per kilo of sulphur. Officials say that the waiver is to guard against fuel shortages. The Energy Ministry rejected the import of 60,000 metric tonnes of petrol from Emirati firm One Petroleum in March on safety grounds and ordered its withdrawal from the market (AC Vol 67 No 9, Ruto stakes his presidency on a $39bn investment blitz).
Kenya appears to have been better placed than its neighbours for the oil supply restrictions caused by the United States/Israeli war against Iran. ‘The measure is temporary and intended to ensure continued fuel availability and sustain economic stability during the current period of global supply disruption,’ said Lee Kinyanjui, Cabinet Secretary for Investments, Trade and Industry, in a statement.
It is a curious move since excess sulphur in fuel can interfere with catalytic converters in vehicle engines and can damage them. So, too, is the fact that the announcement was made by Kinyanjui rather than Energy Cabinet Secretary Opiyo Wandayi.
Wandayi was the only senior official in his ministry not to resign after the One Petroleum scandal. Kenya Pipeline Company Managing Director Joe Sang, Mohamed Liban, the Principal Secretary at the Energy and Petroleum Ministry, and Daniel Kiptoo, Director-General of the Energy and Petroleum Regulatory Authority, all stood down and were later arrested before being released without charge.
Ministers has so far been able to cushion Kenyans from the hefty increase in oil prices, now standing just over $100 per barrel. In mid-April, fuel pump prices rose by around 6% after the government slashed VAT on fuel from 16% to 8%, compared to 30% in Tanzania.
In the medium-term, the Ruto government’s close relationship with the United Arab Emirates, with whom it has most of the controversial government-to-government contracts – of which One Petroleum is one – could mean more fuel and lower cost after the UAE announced its exit from the Organisation of Petroleum Exporting Countries so that it could increase production.
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