KCB Bank Kenya has pumped over Sh120 billion into Oil Marketing Companies (OMCs) to assist in importing fuel as it seeks to consolidate its support to the energy sector.
The partnership is also aimed at supporting OMCs in the stabilization of fuel prices in the short term, as the government phases out the fuel subsidy program.
“KCB is a champion of regional trade, we are working with the oil marketers to better support them to compete in the global petroleum market,” said KCB Group CEO Paul Russo.
KCB has been facilitating oil importation into the country by financing the oil firms under its portfolio that have won business under the Open Tender System (OTS) through the Ministry of Petroleum and Mining.
Under the OTS system, the winning oil marketer imports the fuels on behalf of the other firms using the confirmed allocations; the other oil marketers are mandated to offtake their volumes upon arrival.
Since 2005, Kenya has been importing refined petroleum products through the OTS — whereby the winning bidder solely imports the petroleum products and delivers them to the port of Mombasa, where other oil marketers buy from the importer.
Importation of petroleum products through the OTS allows the oil marketing companies to access petroleum products at the same price and therefore levels competition in the petroleum market.
OTS is run through monthly tenders and entails sourcing of petroleum predominantly from the spot market, whereby petroleum is sourced from the open market without any prior contracts.