Press Center | Freight Shipping Logistics News

The price of diesel is set to rise by Sh3 a litre, as pump prices are adjusted upwards to reflect the cost of a recently imported cargo.
The price of diesel is set to rise by Sh3 a litre, as pump prices are adjusted upwards to reflect the cost of a recently imported cargo.

Importer Gulf Energy issued a bill of lading for the commodity on August 5 this year, which marketers say contained a mark-up on the expected pricing.

There has been disquiet in the industry with players demanding to know why the bill of lading was issued for the second time.

On June 22, 2010, Gulf Energy won a tender to import 39,839 metric tonnes of diesel and issued a bill of lading for the diesel which was loaded onto a ship, Mt Ambrosia. It was to be delivered from July 29 to 31 this year.

But the diesel was transferred on the high seas to Mt Alpine Liberty on August 5, 2010, five days after the allocated date range and another bill of lading issued.

A bill of lading is a document issued by a transporter to a shipper acknowledging receipt of specified goods received on board as cargo for transport to a named place. It sets terms of contract besides providing for proper delivery.

Arising from this, Shell, the industry supply co-ordinator, said Kenya will now incur an additional cost of Sh160 million.

“If this seller is not stopped, his actions will cost the economy an additional Sh160 million due to the upward trend of international prices during the period,” said the company in a letter sent to Energy PS, Patrick Nyoike on August 16, 2010.

“This episode of ship to ship operation and the issuance of a second bill of lading go against trade usages and customs of oil industry. We request your intervention requiring the importer adhere to laid down terms,” said Shell’s country chairman, Jimmy Mugerwa.

Some senior officers in the oil industry, who asked not be named, said that though the bill of lading was disputed by marketers, the Energy PS asked them to pay Gulf Energy, meaning consumers will have to bear the burden of increase.

“Marketers were told to pay the importer, although there were divergent views over whether the open tender system (OTS) rules allow for a variation of bill of lading as the diesel arrived on August 6, 2010,” said the officials.

But Gulf Energy in its defence said the diesel was transferred to Mt Alpine Liberty, since Mt Ambrosia, which carries over 105,000 metric tonnes could not dock in Mombasa because only tankers of up to 85,000 MT can be accommodated.

Mr Francis Njogu, CEO of the company, said ship to ship transfer is normal industry practice, which enables the importer to take advantage of economies of scale since purchase is made off a large cargo.

“Ship to ship thwart the risk of product stocks in case of a hijacking of an industry vessel by pirates, not to mention delays in insurance premiums and associated costs, mitigating against potential acts of piracy,” he said.

He added that the bill of lading by Gulf Energy is legally binding as the firm did not take advantage of the prices rising internationally when issuing the document and transfer of products from ship to ship was done by other marketers.