Energy Prices No Laughing Matter

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Energy Prices No Laughing Matter

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The Nation (Nairobi)

September 29, 2008

Opinion Article By Oduor Ouma

Among the tragedies of our politics is the fixation with fitting square pegs into round holes.

Energy minister Kiraitu Murungi - a lawyer who experimented with activism - appears as one such square peg being desperately hammered into a round docket.

His call on motorists to boycott petrol stations charging highly ignores a number of facts, borders on amateurism, and portrays a helpless government in the face of an energy crisis.

A predecessor - was it Simon Nyachae? - tried the trick in the 1990s and it didn't work; motorists thought they had better things to do than hunt for "cheaper" petrol then end up spending Sh200 to save 50 bob. Even the State oil firm ignored him.

The task the minister faces goes beyond making populist noises about oil companies' need to do justice. They'll not, and he'll do absolutely nothing. The oil giants might as well pack up and go, leaving you with a bloody nose after transport grinds to a halt.

The minister should find out the kind of fellows he is dealing with.

Each oil giant has an annual turnover that can keep the Government he serves going for a decade. That they operate here at all is perhaps strategic - the hope, for example, that Kenya might strike oil they need to control.

Painful as it may sound, what these firms make here hardly register in their corporate financial radars. As the minister urges boycott, their private jet-flying executives are discussing the next $20 billion oil well in Saudi Arabia.

A little background. Take the US. It has vast oil deposits of its own, while Kenya has no known reserves.

It struck oil in Pennsylvania in 1859, and for decades, until 1945, was the world's leading oil producer - and superpower.

But by 1950s, it began to rely on imported oil, and foreign oil accounted for just 10 per cent. By the 1970s, it had shot to 36 per cent. At the same time, domestic production began an irreversible decline in 1972.

A country with less than 5 per cent of the world's population now produces 3 per cent of global oil supply, uses 25 per cent, and by 2025, will need 50 per cent.

Oil is finite, and your dilemma, Mr Murungi, should be what you will do when petroleum - already at 26 per cent of Kenya's imports - becomes even more expensive. You should be shuddering at the thought that some day, the strongest nations will grab all the oil.

Go to the Treasury and tell acting Finance minister John Michuki that he's responsible for high pump prices. Tell him to cut, the taxes and levies that, the last time I checked, stood at 60 per cent of the pump price.

Fuel prices should thereafter go down by Sh30. This would resonate with commuters and manufacturers. Remind Mr Michuki that this might help his double-digit inflation as general prices drop.

Next, see Transport minister Ali Chirau Mwakwere, but go with your Nairobi Metropolitan counterpart. Remind Mr Mwakwere that he's snoring on the job, if media complaints are anything to go by.

Tell the two that transport jams where motorists take three hours instead of 30 minutes call for a rail network linking the city to the suburbs. While at it, tell them to ban 14-seater matatus since these are cost-ineffective.

Finally, summon the KP&LC and KenGen boards. Adopt your sternest posture yet, and talk without preamble. Tell the KenGen team you want weekly reports on alternative sources of energy.

Revise their performance contracts to include the number of wind, solar and geothermal stations built each month. Order them to reduce tariffs to KP&LC and dismiss them.

Turn to the KP&LC and tell them they are ruining the economy with high electricity bills. Tell them to start a media campaign to save energy.

Be left pondering over that nuclear plant you were begging the British the other day. Then call a press conference and say what you've done, taking care to arrive in a Toyota 1,400cc. I assure you, the public will have a new respect for you.

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