Oil exploration to begin as fuel price debate rages on

Published on September 28, 2006, 12:00 am
By Noel Wandera and Kimathi Njoka
Kenya is pushing to reduce dependence on fuel imports as industry players meet with government officials over high retail prices.
President Kibaki on Wednesday said oil exploration off the coast of Lamu begins in November or December.
In a speech read by Vice-President Mr Moody Awori at the opening of Kenya Pipeline Company new headquarters, the President said the plan had elicited interest from industry players.
Kibaki also expressed concern at high retail prices for petroleum products. Over the last four years the price of crude oil has risen almost threefold.
But in the last two months the price of a barrel (159 litres) on the world market has fallen from an all-time high of about Sh5,720 in July to below Sh4,380 on Wednesday, a 23 per cent drop.
Local petroleum product dealers have, however, stuck with the same average retail price of Sh85.69, arguing that they were still distributing products sourced at the old prices.
"I hope that oil marketing companies will pass the benefits (of lower international prices) to local consumers," Kibaki said.
Meanwhile, the Ministry of Energy has on Friday summoned oil firms to a meeting on retail prices. The firms will be expected to "empirically defend their continued failure to lower retail prices, despite sustained drop in international crude costs".
Mr Patrick Wanyoike, Energy permanent secretary, said he reads pure greed on the part of the oil industry in the high prices.
Consumers may enjoy lower fuel pump prices from next month, though. Kenya Oil Company (Kenol) on Wednesday announced it had sealed a deal at a discounted price to supply 1.2 million barrels of crude oil in November.
Kenol Head of Group Corporate Affairs Mr Edwin M Kinyua says the cargo was traded at a small premium over the Abu Dhabi National Oil Company prices ?currently $61.40.
Earlier Mr George Wachira, general manager of the Petroleum Institute of East Africa, was quoted as saying the next consignment was expected to have been committed at $65 a barrel.
Kinyua said Kenol will import the oil in two consignments of about 95 million litres each in November under the Open Tender System. This is sufficient to meet 70 per cent of local market demand.
In the same speech, President Kibaki also announced nine power projects the Government will undertake to provide an additional 290MW to the national grid. Kenya has an installed capacity of 1,060 megawatts under normal weather conditions, only marginally above the peak demand of 965MW.
"This (55MW) surplus is too small to cope with existing demand in the event of either a major power plant breakdown or severe drought," said Kibaki.
About 260MW of the additional capacity will come from three planned power plants in Mombasa fired by coal, diesel and kerosene.
Cleaner energy from wind and solar power will also contribute to the increase. The president said Sh303 million has been set aside to provide solar electricity generators to schools and health centres in arid and semi arid districts.
Awori was standing in for President Kibaki at the opening of Kenpipe Plaza, KPC new headquarters in Nairobi. The seven-storey Plaza has taken seven years and Sh1.47
billion ?Sh700 million above budget ?to complete. KPC will occupy five floors, lease one and use the last for a gymnasium.