Latest big fuel purchase shows demand up
18 February 2012, 16:35
Singapore - Kenya has bought over 400,000 tonnes of oil products for March to May, its highest purchase for this year, as demand increases on a growing economy and a shortfall in refining capacity.
Its fuel purchases for April, for instance, were more than double its January imports, indicating a growing demand for fuel.
Lower inflation and cheaper staple fuels have increased purchasing power for refined oil products in Kenya, whose economy is dependent on diesel for transport, power generation and agriculture and kerosene in homes for power generation.
Kenya's energy regulator trimmed prices of staple fuels for the third month running on Tuesday, pursuing cuts that have helped to shore up the shilling currency and rein in high inflation rates in east Africa's largest economy.
The new prices went into effect on Wednesday and will make kerosene almost four percent cheaper.
Inflation in Kenya is also set to continue to fall as the country's acting minister urged banks to cut lending rates to help the middle class.
Even as rich countries face an economic slowdown, sub-Saharan African economies are expected to post nearly 6 percent average growth in 2012, according to the International Monetary Fund.
A study by the International Finance Corporation, part of the World Bank, has pointed to the potential of the continent's more than 1 billion people, millions of whom have moved out of subsistence agriculture and into urban jobs over the past decade.
Demand for diesel in particular is expected to increase as heavy rainy season over the next few months will likely boost harvests.
Kenya has bought about 14,700 tonnes, or about four percent, more oil products for March-May, compared with February-March purchases, with the additional requirements seen for gasoline and diesel. The premiums achieved were lower than the previous tender, likely on higher flat prices, traders said.
The Ministry of Energy bought 108,806 tonnes of jet fuel, 108,673 tonnes of gasoline and 195,352 tonnes of diesel from Gulf Africa Petroleum Corp (Gapco), Addax Kenya and KenolKobil, traders said.
It bought two jet fuel cargoes of 60,000 tonnes and 48,806 tonnes for delivery over Apr. 9-11 and Apr. 25-27 from Gapco and Addax at premiums of $16.50 and $18.25 over Middle East quotes respectively.
It also bought two gasoline cargoes of about 54,300 tonnes each for delivery over Apr. 5-7 and Apr. 21-23 from Gapco at premiums of $27.90 and $13.50 over Mediterranean quotes respectively.
For 500 ppm sulphur gasoil, Kenya bought three cargoes in total. Two were 85,375 tonnes each for delivery into Kipevu Oil Terminal (KOT) over Apr. 15-17 and May 1-3 from Gapco and KenolKobil at premiums of $27.30 and $26.48 a tonne over Middle East quotes respectively.
A third gasoil cargo of 24,602 tonnes for delivery into Shimanzi Oil Terminal (SOT) over Mar. 15-18 was sold by KenolKobil at a premium of $32.88 a tonne.
Kenya last bought 398,131 tonnes of oil products in the spot market for delivery over February and March.