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Detectives step up investigations into KPC’s lost billions

Seth Onyango @SethManex

Detectives have zeroed in on top Kenya Pipeline Company (KPC) directors as they stepped up investigations into the alleged loss of billions of shillings at the State-owned firm.

The move came even as the management denied any corruption allegations at the company.Already, a special team of sleuths are combing through documents submitted at the Directorate of Criminal Investigations (DCI).

DCI head George Kinoti said he formed a special team of investigators to look into the case after a formal complaint was raised.

Also digging through the files is a team of investigators from the Ethics and Anti-Corruption Commission (EACC), which said through spokesperson Yassin Amaro that they were at an advanced stage of the probe.

KPC managing director Joe Sang rubbished claims that the firm had lost billions of shillings through dubious award of tenders.

Reports in the local dailies indicated that tenders worth about Sh95 billion were scrutinised for possible corruption at the oil and gas distributor.

On the spotlight is a Sh48.4 billion tender for the construction of 20-inch pipeline between Mombasa and Nairobi awarded to Zakhem.

Sang denied any corruption even as KPC suspended three officials to allow investigations into alleged malfeasance.

The corporation suspended general manager for Finance and two directors in its procurement department, even as Sang insisted no money had gone missing.

Sang said out of the amount, Sh35 billion was a loan from a consortium of banks on the strength of the KPC balance sheet.

“Before making the decision to finance this project, the banks examined the project documents including the feasibility studies informed the project and determined that the project was bankable. The balance of Sh13.4 billion of the project cost is being financed by KPC,” he explained.

But the controversy has been the Sh18.9 billion Extension of Time (EOT) claims KPC allegedly paid Zakhem. Sang clarified that the aforementioned firm has not been paid any EOTs.

“The contractor lodged four EOT claims for a total amount of Sh18.9 billion. No EOT has been paid to Zakhem,” he said.

“In view of the nature and magnitude of the EOT claims, KPC and the contractor appointed an independent consultant to provide expert scheduling services for the four EOT claims. After analysing the claims, the EOT claim was revised downwards to a net amount of Sh2.7 billion,” he added.

So far the contractor has been 97.3 per cent of the contract sum even as the construction of the pipeline nears completion, 99.5 per cent been laid.

Kinoti confirmed he had received a file with names of officials implicated in the scam. Among those being targeted, is a KPC director and board member accused of influencing the award of a tender to a company associated with her.

The said construction company is alleged to have been paid Sh154 million to construct a 400-metre perimeter wall at the Kisumu depot (PS28) which translates to about Sh385, 000 per metre).

It emerged that the contractor was at the same time putting up a six storey residential apartment for the said director at Kapsoya Estate in Eldoret.  

Official documents indicate the project was named “Civil Rehabilitation Works at PS28 (E/C.358)” to justify looting of public funds.

Sang clarified that the project involved the fencing of 1,200 metres by erecting a perimeter wall, still considered exorbitant.

On the controversial construction of Line 6 (Kisumu-Sinendet) pipeline, the MD said the tender was changed because the scope of work had changed.

He, however, could not explain why the figure changed from the initial Sh4.7 billion awarded to Egyptian firm Petrojet, to Sh5.7 billion that will be paid to a Chinese firm.

On KPC’s purchase of 2-acre piece of land LR No 209/8618 on Nanyuki Road from Armco Kenya Limited, Sang said stamp duty was assessed at Sh21, 800, 040 being 4 per cent of the assessed value of Sh545 million paid on December 6 last year.

“10 per cent of the VAT of Sh54 million was paid to the seller on 16th January 2017; whereas six per cent withholding VAT of Sh32.7 million was paid directly to KRA on 8th February 2017,” he said.

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