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Post Reply: Power Struggle Erupts Over Kenya’s Multi-Billion Shilling Petroleum Reserves

<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on May 16, 2025, 7:51 am</div><div id="pl-5897"  class="panel-layout" ><div id="pg-5897-0"  class="panel-grid panel-no-style" ><div id="pgc-5897-0-0"  class="panel-grid-cell"  data-weight="1" ><div id="panel-5897-0-0-0" class="so-panel widget widget_sow-editor panel-first-child panel-last-child" data-index="0" data-style="{&quot;background_image_attachment&quot;:false,&quot;background_display&quot;:&quot;tile&quot;,&quot;background_image_size&quot;:&quot;full&quot;,&quot;background_image_opacity&quot;:&quot;100&quot;,&quot;border_thickness&quot;:&quot;1px&quot;}" ><div
			
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	<p dir="ltr" data-pm-slice="1 1 []">A fierce tug-of-war has emerged between two Kenyan state agencies, the Energy and Petroleum Regulatory Authority (EPRA) and the Kenya Petroleum Refineries Limited (KPRL), over control of the nation’s strategic petroleum stocks, valued at billions of shillings. The dispute centers on managing fuel reserves at the Mombasa-based KPRL facility, with far-reaching implications for Kenya’s energy security and economic stability.</p>
<p dir="ltr">The strategic petroleum stocks, estimated to be worth over Kshs. 7 billion, are critical for ensuring Kenya’s fuel supply during global oil price spikes or supply chain disruptions. These reserves, stored in four tanks at KPRL’s dormant Mombasa refinery, include super petrol, diesel, kerosene, and jet fuel. The stocks were established in 2019 to stabilize fuel prices and safeguard the country against shortages, with oil marketing companies mandated to contribute to the reserves.</p>
<p dir="ltr">At the heart of the conflict is a disagreement over who should oversee these vital assets. EPRA, the regulatory body responsible for the energy sector, insists on maintaining control, arguing that its mandate includes ensuring the strategic stocks are managed transparently and efficiently. The authority has accused KPRL of attempting to seize control through covert means, including a secret agreement with oil marketers to manage the stocks without EPRA’s involvement. EPRA claims this move undermines its authority and risks mismanagement of the reserves.</p>
<p dir="ltr">KPRL, a state-owned entity under the Ministry of Energy and Petroleum, counters that it is the rightful custodian of the stocks, given its ownership of the storage facilities. KPRL argues that it has the infrastructure and expertise to manage the reserves effectively, positioning itself as the natural choice to oversee the strategic stock program. The company has reportedly engaged oil marketing companies to support its bid, further escalating tensions with EPRA.</p>
<p dir="ltr">The dispute has sparked concerns about Kenya’s ability to maintain a stable fuel supply, especially amid global energy market volatility. Industry insiders warn that the standoff could disrupt the release of petroleum stocks during emergencies, potentially leading to fuel shortages or price hikes. The Petroleum Outlets Association of Kenya has called for an urgent resolution, emphasizing that the strategic reserves are a national asset requiring clear governance.</p>
<p dir="ltr">Adding complexity to the issue, the government is considering winding down KPRL as part of a broader plan to privatize the Kenya Pipeline Company (KPC). This proposal, announced by National Treasury Cabinet Secretary John Mbadi, includes integrating KPRL’s assets into KPC to streamline operations and establish a regional petroleum trading hub in Mombasa. However, the ongoing dispute with EPRA could complicate these plans, raising questions about the future of the refinery’s infrastructure.</p>
<p dir="ltr">The conflict has also drawn scrutiny from anti-corruption watchdogs, given the massive financial stakes involved. The high value of the petroleum stocks makes them a potential target for mismanagement or graft, prompting calls for greater transparency in how the reserves are controlled. Both EPRA and KPRL have been urged to prioritize the public interest and resolve their differences through dialogue.</p>
<p dir="ltr">As the standoff continues, the Ministry of Energy and Petroleum faces mounting pressure to intervene and clarify the roles of the two agencies. Stakeholders are urging the government to establish a robust legal framework to govern the strategic petroleum stocks, ensuring they serve their intended purpose of protecting Kenya’s energy security.</p>
<p dir="ltr">For now, the battle for control of the multi-billion-shilling reserves remains unresolved, casting a shadow over Kenya’s efforts to safeguard its fuel supply and stabilize its energy market.</p>
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