EPRA price caps: Independent petroleum dealers threaten fuel halt

Fears of a severe fuel supply disruption have gripped Kenya following a decisive joint ultimatum issued by independent petroleum dealers.

The crisis has erupted after associations representing independent retailers threatened to suspend the purchase of petroleum products entirely.

They have accused major Oil Marketing Companies (OMCs) of predatory pricing, specifically charging wholesale rates that far exceed the statutory limits established by the Energy and Petroleum Regulatory Authority (EPRA).

The escalating dispute threatens to trigger widespread stock-outs and force independent petrol stations across the country to shutter their operations, plunging motorists, commuters, and businesses into profound uncertainty.

In a joint statement released on Tuesday, October 27, the Petroleum Outlets Association of Kenya (POAK) and the Kenya Independent Petroleum Dealers Association (KIPEDA) sounded the alarm over what they termed an unsustainable business environment.

According to the associations, the standoff stems from actions by major OMCs, which have allegedly been selling petroleum products to independent dealers at prices well above the maximum wholesale ceilings published by EPRA in its October 14 pricing schedule. Independent operators report that this malpractice has persisted unhindered since October 15, when the latest pricing cycle took effect.

Under the prevailing framework, independent petrol stations are caught in an economic squeeze. They are forced to buy products at inflated wholesale costs while being legally bound to retail within EPRA’s capped pump prices. This leaves them operating at severe financial losses, making daily business operations nearly impossible.

“We advise all independent petroleum operators countrywide to immediately suspend the purchase of petroleum products at rates exceeding the gazetted EPRA wholesale limits,” the associations declared in their joint directive.

Furthermore, the industry bodies warned that independent stations nationwide are facing critical product stock-outs. Operators are now confronted with a stark choice: either close their doors indefinitely or continue trading into bankruptcy.

The dealers have directed sharp criticism at both EPRA and the State Department for Petroleum, demanding immediate enforcement action against oil marketing companies that are flouting pricing regulations. The associations warned that any further delay or inaction by the state regulator risks cascading into a complete breakdown of fuel distribution channels nationwide.

Independent dealers play a vital role in Kenya's downstream petroleum sector, often servicing remote and peri-urban areas that major oil marketers overlook. A prolonged standoff or widespread closures among these independent outlets would instantly paralyze transport networks, disrupt supply chains for agricultural produce, and drive up transportation costs across the board.

This latest clash does not occur in a vacuum; it follows hard on the heels of intense public anger triggered by EPRA’s announcement of sharp fuel price hikes for the October 15 to November 14 pricing cycle.

During the mid-October review, EPRA adjusted pump prices significantly upward. In Nairobi, the price of Super Petrol surged by Sh12.93 per litre, diesel by Sh9.90, and kerosene by a staggering Sh28.49. Consequently, maximum pump prices in the capital settled at Sh226.96 for Super Petrol, Sh227.76 for diesel, and Ksh219.87 for kerosene.

These steep adjustments were primarily driven by the government's decision to suspend the fuel price stabilisation mechanism a policy tool that previously cushioned motorists and consumers from volatile international petroleum price spikes. Defending the move, EPRA Director General Eng. Edward Mwirigi Kinyua explained that the decision was made to preserve stabilization funds for future, more severe international price shocks.

However, within this stringent pricing structure, EPRA had originally capped the wholesale prices in Nairobi at Sh211.80 per litre for Super Petrol, Sh212.60 for diesel, and Sh204.79 for kerosene. It is these exact wholesale safety margins that independent dealers claim OMCs have blatantly bypassed, squeezing the profit margins of smaller distributors out of existence.

The timing of this looming supply disruption could not be worse. Households and enterprises are already grappling with an elevated cost-of-living crisis, worsened by heavy taxation on basic commodities and energy products.

As the standoff between independent dealers and major wholesalers continues, consumers are left anxious about the immediate future.