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War on sale of tainted fuel far from won

An illegal fuel adulteration network is continuing with its activities one year after senior Energy ministry and security officials intensified a crackdown to dismantle the powerful cartel.

Investigations by the Nation show that the organised black market dealers run big depots where petrol and diesel, largely acquired through dubious means, are mixed with kerosene to reap huge profits while endangering the lives of millions of people and damaging thousands of vehicles and machines.

Nairobi hosts the most sophisticated cartel, with many depots still coming up in Umoja, Kayole, along Kangundo Road and the Eastern Bypass.

Some of the depots are located within residential estates, where the risk of fire and massive casualties is very high.

The depots, commonly referred to as shambas, are run by organised dealers.

HIGH PERIMETER FENCES

The dealers secure open grounds and erect high iron sheet perimeter fences. Tankers get in and out to deliver or collect petrol, diesel and kerosene for markets stretching across the country.

The Nation has been tracing the locations of some of the biggest and most notorious depots in Nairobi’s Industrial Area, where the illegal multi-million-shilling business continues unhindered.

Ironically, some of the adulteration depots are on Nanyuki Road, where the Kenya Pipeline Company (KPC), the State fuel storage and transit firm, is located.

The busiest of the depots is perhaps the one located on Ol Kalou Road, two streets from the KPC, where the Nation investigation team counted 110 trucks driving in and out on Thursday alone.

Sources, who spoke in confidence, say most of the illegal depots in the area are run by the same cartel “that is well known by the authorities”.

During weeks of investigation, the Nation noted that most of the illegal facilities are heavily guarded, with several young men pacing around the gates as they keep an eye on any stranger while keen not to draw anyone’s attention.

ADULTERATION DEPOT

There are reports that recently, there was a fire at the fuel adulteration depot on Ol Kalou Road. Some people are said to have been injured but the incident was quietly handled, with no report made to the police.

“They even refill gas cylinders inside there. The young men at the gates are suspicious of visitors. They have particular trucks they allow in. They are like matatu touts, only that they don’t shout,” said a source as a truck made its way towards the gate.

In an interesting twist, at least three private vehicles whose occupants we were told were police officers drove in and out of the illegal fuel depot at various times.

READ: Fuel adulteration cartel operates despite crackdowns

In the evening, two police vehicles also drove in and out. However, the Nation could not establish what their mission was. All the while, activities at the depot continued uninterrupted.

On the lower Lunga Lunga Road, also in Industrial Area, two more suspected adulteration depots operate near a road construction site, posing a risk to the nearby Mukuru Kwa Njenga slums.

KEEPING WATCH

Several lorries are strategically parked outside, waiting for their turn, with a group of young men keeping watch.

The Nation investigation team was taken to five more sites in the area, with reports that most of them were established recently.

Trucks carrying transit fuel, which has not been taxed, stop at the depots to offload the product. In other cases, they top up with adulterated fuel. This may compromise the quality of fuel supplied to consumers.

Sources told the Nation that the depots are major recipients of stolen fuel from oil marketing companies through rogue staff.

READ: Oil marketers wince as cartels steal product

Allowing the trucks to travel at night has helped smoothen the trade. Truckers went on strike in April, prompting the government to rescind a ban on night transportation of fuel.

Petroleum Principal Secretary Andrew Kamau told the Nation that the cartels still exist despite various crackdowns and extra taxation on kerosene, which was meant to discourage the illegal business.

PRICES

“The cartels have never gone away. It is serious. Until kerosene prices are put at par with those of diesel, like what Tanzania has done, we will not be able to do away with them.

That is why we are pushing for LPG (liquefied petroleum gas) usage because those using kerosene have to first get an alternative,” Mr Kamau said while referring the Nation to get accurate updates on the situation from the Energy Regulatory Commission (ERC).

ERC acting director-general Pavel Oimeke had, however, not responded to Nation queries on what the regulator is doing to end the illegal trade that is growing amid concerns that Kenya was losing the fuel export market in the region following reports of adulteration of the product.

The regulator, which introduced the use of self-test kits, is currently embroiled in a tender row with its petroleum monitoring service provider after it controversially terminated a tender for fuel marketing.

ILLEGAL PRODUCT

Last year, the situation threatened to get out of hand, prompting Energy Cabinet Secretary Charles Keter to lead a raid in parts of Nakuru, where the illegal product was destroyed.

KPC did not readily provide the latest fuel export data but it has of late been engaged in a marketing spree, including lowering rates for exported petroleum, to win back the market that had been threatened as the landlocked countries in the region turned to Tanzania.

READ: KRA to destroy adulterated fuel in Eldoret

Rwanda, which used to import an average of 60 tonnes of diesel through Kenya, stopped doing so in July 2016, opting for Tanzania, which it claims has cleaner fuel and has a bigger axle load limit, offering better economies of scale.

Burundi, too, had stopped sourcing any diesel from Kenya, choosing to only source kerosene and jet fuel.

REDUCED IMPORTATION

The Democratic Republic of Congo which, in January 2016 imported 11,425 tonnes of diesel, had by July reduced the importation of the fuel through Kenya, to 9,817 tonnes.

“What these dealers don’t realise is that their greed for quick money is only short term because, in the long run, we are going to lose these markets and they will have no one to export to.

It will be foolish to make quick money and lose a whole market,” Mr Keter told the Sunday Nation during the September crackdown

The government had to increase excise tax on kerosene by Sh7 per litre but this still failed to address the adulteration menace since there still exists a Sh21 per litre difference in the tax of diesel and kerosene.

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