BY LUKE MULUNDA

NAIROBI, Monday Jan. 16 2012 – A major oil shortage has hit Kenya’s capital Nairobi, touching off a mad rush by motorists to fuel stations and causing traffic jams around the city.

The cause of the shortage is not clear but coming just a few days after the government fuel price regulating agency cut pump prices by up to Sh7, some speculators believe oil marketers are hoarding the commodity hoping an artificial under-supply will force prices up.

The Energy Regulatory Commission (ERC) has just released a press statement attributing the fuel shortage today to an “unforeseen demand spike over the weekend occasioned by the announcement of the new oil products pricing schedule.”

But  analysts dismiss this view saying the fuel prices last a whole month and thus motorists could not fuel abnormally high on the first few days. KenolKobil was the first to report shortage on Sunday, when most of its stations ran out of all fuel brands.

“Investigations by ERC confirm that the fuel shortage is not in any way attributable to market manipulation by oil marketers as earlier alleged in sections of the media,” ERC director-general Kaburu Mwirichia says. “All leading oil marketers have today proceeded to lift respective products for onward delivery to their outlets today. After carrying out our investigations, we can conclude that the situation was occasioned by the reductions in pump prices and not market manipulation.”

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 The statement said the ERC management toured a number of fuel depots to assess the situation and has been assured of normal service deliveries, but a spotcheck BUSINESS TODAY journalists found long queues of vehicles in city centre fuel stations, which prompted traffic police to intervene. ERC on Saturday announced new pump prices for January 15th to February 14th 2012.

The maximum allowed price of Super Petrol in Nairobi decreased by Sh7.11 per liter, that of Diesel decreases by Sh3.08 per liter while that of Kerosene decreased by Sh3.63 per liter. “ERC will further continue to monitor the sector to ensure implementation and the observance of the principles of fair competition,” he said.

ERC regulates the fuel prices in accordance with Legal Notice No.196, The Energy (Petroleum Pricing) Regulations, 2010. In accordance with Section 102(w) of the Energy Act 2006, a person convicted of retailing petroleum products above the maximum levels will be liable to a fine not exceeding Kenya shillings one million, or the withdrawal of their operating licence or both.

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Managing Editor, BUSINESS TODAY. Email: [email protected] ke

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