KenolKobil Says Price Controls May Lead to Shortages

KenolKobil Ltd., a Kenyan fuel retailer, said price controls proposed by the government would probably lead to product shortages in the East African nation.

“The price control suggestion is surprising since, as far as we are aware, there has been no consultation by the government or its regulatory bodies with major oil industry players,” the Nairobi-based company said in an e-mailed statement today.

Any form of price control must be reviewed regularly by an independent body and take into account all factors influencing costs, including infrastructure inefficiencies, Chairman and Managing Director Jacob Segman said in the statement.

Last month Kenya’s government blocked Kenya Petroleum Refineries Ltd. from raising prices following a jump in gasoline costs in the East African nation. The government told the refinery, which is 50 percent state-owned, to improve efficiency rather than increase charges.

Fuel retailers in Kenya increased prices last month because of what they termed inefficiencies at the refinery, as demand for fuel grew 7 percent, the refiner’s chief executive officer, Raj Varma said Nov. 24.

Kenyan President Mwai Kibaki earlier this year refused to sign a law capping the price of fuel, food and other essential items, the Daily Nation newspaper reported on Sept. 2, citing a memorandum sent to the office of the parliamentary speaker, Kenneth Marende. The introduction of price controls would contravene agreements signed with the World Trade Organization, the newspaper said.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net

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