Influence of regulatory practices on fuel prices in Kenya: A case of vivo energy Kenya ltd

Abstract

Fuel is widely used across all sectors of Kenyan economy with no effective cost-beneficial substitute available. The industry was liberalized in 1994 which resulted in increase in number of independent oil distribution companies in Kenya. Kenya imports all its fuel through the Open Tender System, whereby petroleum products are purchased by a single company for the entire market on the basis of a public tender and shared among all marketing companies in proportion to their share of the market. Over the years, fuel price dynamics became relatively volatile which resulted into the regulation of fuel through the ERC in December 2010.

The study was carried out at Vivo Energy Kenya Ltd .This study seeks to establish the influence of regulatory practices on fuel prices and add to the body of knowledge relating regulatory practices by governments. The study was a descriptive research and adopted a case study design. Questionnaires were the main data collection instruments. Descriptive analysis was used; this included the use of standard deviation, relative frequencies and percentages. The data is presented using tables.

The study findings show that Organizational Structure plays a major role in fuel prices in Kenya.  The study concludes that for any regulatory practices on fuel prices to succeed key considerations must be put in place.  These key factors are both internal and external factors to the organization.

The key internal factors include organizational structure with the appropriate expertise and management team with the right skills, experience to succeed, the change management must be in place to communicate the strategy to all stakeholders. External factors include government regulations, cost of capital, and nature of ownership.

Keywords: Regulatory practices, internal factors, external factors