@CapitalFMNews

Local airlines accuse oil marketers of arm-twisting to secure tenders

1 months ago, 16 Nov 09:31

By: Laban Wanambisi

, NAIROBI, Kenya, Nov 16 – Top airlines in the country have called on the National Assembly Committee on Energy to dismiss a petition in which two leading oil marketers allege that there are unlicensed operators engaging in the supply of jet fuel.

The management teams of Kenya Airways, Safarilink and Fly540 told the Committee that the petition emanated from their decision not to award the petitioners business and said they will not be forced into doing business with them.

“The petitioner has approached Safarilink for business, and the he has also lost some business with KQ.  Basically the petitioner wants our business, this is a red-herring where you are disparaging the other people who have ERC certification – except the two ERC dismissed – but everyone else we deal with is licensed by ERC,” Safarilink CEO Alexi Avedi stated.

KQ Chief Finance Officer Hellen Mwariri on her part explained that the genesis of the matter was on September 21 when the petitioner told the national carrier that they need to increase their fuel prices by Sh5.50 per litre by September 30 failure to which they will reduce their volume.

“So come October 1, we were not going to fuel 35 per cent of our network. So we went out and asked our current fuellers what is it that they can give us, so we gave Oil Libya 15 per cent and ASM 20 per cent to cover ourselves, that is where our problem started, because this basically arm-twisting the airline because you have the muscle, it is not right and it is not fair because that basically cripples our business.”

They made this appeal even as it emerged that Fly540 and Kenya Airways had contracted dealers who are not licensed by the Energy Regulatory Commission to supply jet oil in the county.

Mwariri defended ASM Kenya by producing an ERC certification. She added that the firm had 10 per cent of the all the international in 2018 adding that it is highly recommended by African Airlines Association (AFRAA).

Fly540 CEO Nixon Ooko on his part said Pacific has been their sole supplier for the last five years.

However, ERC Director-General Pavel Oimeke last week told the House Committee that Pacific and ASM are not licensed to operate as exporters and wholesalers of the commodity.

The Committee learned in Thursday’s deliberation that some of big marketers such as Oil Libya or KenolKobil using enter into agreements with the ‘briefcase suppliers.’

Safarilink CEO explained that some firms in the aviation industry have been known to enter into agreement, he called ‘hospitality’ where a firm which has infrastructure on the airport agrees to host a smaller firm which has won a bid to supply airlines with oil.

The smaller firm will act as agent of the host in which it uses its infrastructure to meet its commitments while the ‘host’ gets an agreed payoff from the business.

The local airlines managers explained that due to the competitiveness in the aviation industry it is not uncommon for the market leaders and the small players to ...
Read More


Category: business

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@CapitalFMNews

Local airlines accuse oil marketers of arm-twisting to secure tenders

1 months ago, 16 Nov 09:31

By: Laban Wanambisi

, NAIROBI, Kenya, Nov 16 – Top airlines in the country have called on the National Assembly Committee on Energy to dismiss a petition in which two leading oil marketers allege that there are unlicensed operators engaging in the supply of jet fuel.

The management teams of Kenya Airways, Safarilink and Fly540 told the Committee that the petition emanated from their decision not to award the petitioners business and said they will not be forced into doing business with them.

“The petitioner has approached Safarilink for business, and the he has also lost some business with KQ.  Basically the petitioner wants our business, this is a red-herring where you are disparaging the other people who have ERC certification – except the two ERC dismissed – but everyone else we deal with is licensed by ERC,” Safarilink CEO Alexi Avedi stated.

KQ Chief Finance Officer Hellen Mwariri on her part explained that the genesis of the matter was on September 21 when the petitioner told the national carrier that they need to increase their fuel prices by Sh5.50 per litre by September 30 failure to which they will reduce their volume.

“So come October 1, we were not going to fuel 35 per cent of our network. So we went out and asked our current fuellers what is it that they can give us, so we gave Oil Libya 15 per cent and ASM 20 per cent to cover ourselves, that is where our problem started, because this basically arm-twisting the airline because you have the muscle, it is not right and it is not fair because that basically cripples our business.”

They made this appeal even as it emerged that Fly540 and Kenya Airways had contracted dealers who are not licensed by the Energy Regulatory Commission to supply jet oil in the county.

Mwariri defended ASM Kenya by producing an ERC certification. She added that the firm had 10 per cent of the all the international in 2018 adding that it is highly recommended by African Airlines Association (AFRAA).

Fly540 CEO Nixon Ooko on his part said Pacific has been their sole supplier for the last five years.

However, ERC Director-General Pavel Oimeke last week told the House Committee that Pacific and ASM are not licensed to operate as exporters and wholesalers of the commodity.

The Committee learned in Thursday’s deliberation that some of big marketers such as Oil Libya or KenolKobil using enter into agreements with the ‘briefcase suppliers.’

Safarilink CEO explained that some firms in the aviation industry have been known to enter into agreement, he called ‘hospitality’ where a firm which has infrastructure on the airport agrees to host a smaller firm which has won a bid to supply airlines with oil.

The smaller firm will act as agent of the host in which it uses its infrastructure to meet its commitments while the ‘host’ gets an agreed payoff from the business.

The local airlines managers explained that due to the competitiveness in the aviation industry it is not uncommon for the market leaders and the small players to ...
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Lobby sees revenue loopholes in treaties

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Treasury back in market for Sh14bn after initial bond flop

The Treasury is back in the market with a Sh13.8 billion tap sale for this month’s bond issue, after the initial sale was undersubscribed by 28 percent. ...

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