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House team to grill KPC officials

Seth Onyango @SethManex

Pressure piled yesterday on the top management of the Kenya Pipeline Company (KPC) with summons to appear today before the National Assembly Energy committee over a suspected procurement scandal that, among other deals, may have cost the corporation upwards of Sh33 billion.

In an alert issued yesterday evening, the parliamentary committee wants to question top KPC directors regarding the “hydrant valve procurement scandal”, but the Ethics and Anti-Corruption Commission (EACC) has indicated it is casting its net wider to probe other suspected scams in the State oil distributor.

Apart from the hydrant valves, involving expensive equipment that was bought but not put into use, other details have emerged on how some top officials at KPC may have swindled the public of billions of shillings through massive theft of fuel and dubious award of tenders.

This comes even as the EACC and the Directorate of Criminal Investigations (DCI) launched a probe into the possible of loss of sums estimated to be upwards of Sh33 billion in procurement deals.

EACC chief executive Michael Mubea and DIC director George Kinoti both confirmed they were probing KPC, with the latter having met the corporations top brass to assist in investigations.

Whistleblowers accounts submitted to investigative agencies reveal how senior officials at KPC are suspected to have worked in cahoots with cartels to siphon over eight million litres of fuel from the state-owned firm.

Revelations followed an audit carried out at Morendat Institute of Oil & Gas (MIOG) which showed fuel was sneaked out of KPC depots between August 2016 and March 2017.

According to whistleblowers, the then product accountant was suspended after he was found culpable of failure to follow due process in allocating fuel to oil marketers in the KPC system.

It has, however, emerged that the said accountant was advised to resign and guaranteed he would not be prosecuted, in an apparent cover up to avoid spillage of critical information that could unmask the real faces behind the fuel racket.

In 2016, Oil Marketing Companies (OMC) had raised the red flag that millions of litres of fuel was being sneaked out of KPC depots by a powerful network of cartels colluding with staff. We established that a formula dubbed “allowable gain/loss” which allows KPC to declare loss or gain of fuel of up to 0.25 per cent was being exploited to fuel theft of the commodity.

“When KPC transports 1,000 litres of fuel through the pipeline they are given a provision to account for up to 997.5 litres with 2.5 litres lost. KPC transports in a month close to 300 million litres, meaning it can simply declare a loss of 750,000 litres,” read the documents in part.

Apparently, the firm has been declaring losses despite there being none in a bid to conceal fuel theft, with the loss being passed on to the consumer, OMC  complained.

It is, no wonder, prices of fuel in Kenya remain relatively expensive compared to those the neighbouring countries, oil experts say. Contacted, KPC managing director Joe Sang denied knowledge of any report from MIOG, although his predecessor is said to have commissioned the audit.

Conspicuously missing from KPC’s written response to our queries was justification for the loss of eight million litres of fuel. And this morning at 10am Sang is scheduled to address media at the KPC Nanyuki Road headquarters, Nairobi, according to statement issued by the corporation’s communication unit. That will be shortly before he appears before the Energy committee.

And separately, EACC also wants to find out how a construction company associated with one of the KPC’s directors is said to have been paid Sh154 million to put up a 400-metre perimeter wall at the Kisumu deport (PS28) a figure that translates to about Sh385,000 per metre). Documents seen by People Daily show the contractor was at the same time putting up a six storey residential apartment for the said director in Eldoret’s Kapsoya Estate.

Details show the construction of the wall at the Kisumu deport was titled “Civil Rehabilitation Works at PS28 (E/C.358) so as to justify the high amount for the project.

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