News Release

DELAY IN DELIVERY OF DIESEL

Nairobi, Tuesday 21st February 2011

On Monday the 31st of January, the National Oil Corporation of Kenya released a press statement announcing that we had won the OTS tender for the supply of diesel that would be delivered in two consignments of approximately 56,500MT and 59,736MT in mid February and early March respectively.

Pursuant of this statement, the National Oil Corporation would like to announce the following;

1. We have encountered a delay in the delivery of this diesel to the port of Mombasa. Such logistical delays are commonplace in the petroleum industry, as any other fuel marketer can testify.
2. The National Oil Corporation is committed to delivery of the diesel at the earliest time possible.
3. The National Oil Corporation shall communicate on or before the end of this week (Friday the 25th of February) on the exact date that the consignment shall be expected at the port of Mombasa.

The National Oil Corporation would also like to shed some light on some queries that have been raised by members of media and the public alike.

1. The OTS tender that National Oil was awarded was for diesel fuel only.
2. The price with which National Oil won the tender was USD 13.48 per metric tonne.
3. The tender quote that was closest to ours (second best quote) was USD 28.5 per metric tonne.
4. The next best quotes were USD 33.44 and USD 39.96 per metric tonne.

Contrary to popular belief, the prices quoted above are NOT inclusive of the price of the diesel itself. The quotes simply cover freight and premium only. On top of these prices one needs to add the price of the diesel which is standard according to the internationally recognized Platts Index. It is therefore not true that National Oil shall increase the price that it had quoted and pass the price burden over to consumers. The quoted price is fixed and can not be altered.

The mandate of National Oil Corporation is to stabilize and reduce fuel prices in the country. By reducing the cost at which fuel is landed in the country, National Oil is effectively reducing the end cost at which the consumers will purchase the fuel.

National Oil is facing very fierce criticism from competitors due to the very low prices quoted in the OTS tender for diesel. From the difference in quoted prices between National Oil and other marketers, it is clear that National Oil has (in the interest of consumers and the economy at large) drastically reduced the profit margins that have traditionally been made by other marketers.

National Oil is committed to delivering cheaper fuel to help alleviate the suffering currently being experienced by Kenyans across the country.

National Oil Corporation reiterates that it is now firmly established as a key player in the Petroleum Industry, well positioned to deliver on its mandate of stabilizing the market.

@ VituVingiSana

A little bird tells me that NOCK may be a victim of a well calculated move by some oil companies in Kenya working in cohorts with the suppliers to show that NOCK are incapable of supplying the fuel. MOE will have to call for an emergency tender that those marketers will win.

in the past some companies have even quoted negative freight and premium.

On a point of information, that price is not low, in the past some companies have even quoted negative freight and premuim.

Look I know what I know but look at this scenario

1. A tender is floated by MOE.
2. The OMCs in Kenya call the international traders for offers. The traders quotes say USD 12.
3. NOCK quotes USD13 and wins the tender. (while well conected OMCs had quoted say 40).
4. The well connected OMC (working in cohorts with the trader) is disappointed by losing the tender and hatches a scheme with the trader.
5. The trader invokes force majeure and reneges on delivery.
6. Owing to an imminent shortage MOE invites bids for an emergency tender
7. The OMC in 4. above bids at USD35 and wins.