Time to Deregulate Kenya’s Petroleum Industry

By Alex Njeru, Nairobi

Kenya’s petroleum sector struggling under the yoke of government state inefficiency.

I am a concerned Kenyan. For half a decade now my family has been making a living by being involved in the petroleum sector, now all that is in jeopardy. Of course ours as most other Kenyans is a path trodden by many and dreaded by all. When government gets in between your bread and butter all you can expect is bitter and difficult swallowing.

For years now the petroleum industry in Kenya has been struggling under for reasons unknown to many; yet Kenya’s citizenry have apportioned blame where it is not rightfully deserved. Most Kenyans have often blamed Private Petroleum companies, yet in essence the party that deserves to swallow all the hogwash is the Kenyan petroleum sector.

When Oil from the Arabian Gulf or from the Libyan Port of Misrata or from any other international oil market hits the Port of Mombasa, then a plurality of forces connive to make petrol, diesel and other petroleum products skyrocket irrationally. This in itself triggers a wave of inflation and hyper-inflation with ricochet effects being felt in almost all industrial sectors within the economy.

Yet at the heart of this ominous economic problem lays a debate that has been fundamental to market relations from classical era; to what extent should government meddle in enterprise? Kenya currently has one international Sea-Port at Mombasa managed by a state corporation, the Kenya Ports Authority (KPA). This in itself has meant that infrastructure in the handling of imported fuel has been incapacitated and has been running below capacity for a long time now. The irony is that the jetty used to offload imported fuel from international market has not been upgraded for decades now, meaning that at any given time only one oil Ship can off load its cargo at a particular time. Of course this is absurdity at its peak, for Mombasa as a port serves a rich hinterland that is the East African Community plus Southern Sudan and Eastern DR. Congo. A cycle of inefficiency is then reinforced by the equally inefficient Kenya Petroleum Refineries LTD, that has no inkling about what operational efficiency is or could be and the Kenya Pipeline Company another state corporation synonymous with corruption is entitled with the noble task of transporting important petroleum commodities to other parts of the country.

The paradox is that Kenyans do not realize an efficient petroleum sector will only be realized when the government relaxes its iron grip on the petroleum sector. Indeed the Israeli government advised Kenya to take the path taken by Israel, reminding Kenya’s unfeeling policy makers that the less government in any sector the more efficiency.

Expeditious reforms are way overdue in Kenya’s petroleum sector and indeed fat sloths in the shape of bureaucrats could be replaced by fine minds in the shape of private entrepreneurs.

Alex Njeru is a Kenyan Auditor and associate of AfricanLiberty.org. This article is syndicated by AfricanLiberty.org