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Board wars at debt-ridden KPC escalate

Clouds continue to gather over the Kenya Pipeline Corporation, with bitter intra-board battles, reportedly fanned by conflicting loyalties to powerful forces, compounding its fiscal woes.

KPC managing director Joe Sang and Board chairman John Ngumi appear to be on different orbits and appear to have nothing but disdain for each other. They have been trying to sway the board to their side and using every opportunity to tar each other.   

Fiscal impropriety of huge proportions are, meanwhile crippling KPC with massive financial losses and debts linked to tendering, oil spillage and opaque dealings, among other vices. Ngumi has been categorical that the agency under Sang has underperformed, hence  the losses and debts.    

Interestingly, despite the fact that the Director of Criminal Investigations has completed investigations on corruption related matters at the State agency and forwarded them to the Director of Public Prosecutions, the files have taken months to be acted upon without explanation being offered.

A board meeting called by Ngumi last week to discuss Sang aborted after it failed to raise quorum. Only Petroleum Principal Secretary Andrew Kamau, Winnie Mukami and Rita Okuthe who are reportedly on the side of the chairman showed up.

Those identifying with the MD namely Hudson Andambi, Maj (Rtd) Iltasayon Neepe, Erick Korir, Jinaro Kibet, Wahome Gitonga and Felicity Biriri did not turn up, prompting the chairman to call off the meeting. Six directors make the quorum.

It is understood that Deputy President William Ruto had, a day before the scheduled board meeting, invited the two for a meeting to iron out their differences and asked the board to allow Sang to complete his term which ends in March.

But in an apparent defiance of the DPs truce call, Ngumi has convened yet another meeting tomorrow (Tuesday) with the sole agenda to discuss the MD, raising questions as its value and if it will stoke more heat or finally throw some light into the Pipeline saga.       

Tender wars

Sources within the corporation talking on condition of anonymity  offered that the bone of contention has to do with award of tenders worth billions and whose interest have been best and most profitably served. 

It’s telling that when he appeared before the Senate Energy Committee, Ngumi said the board was in the dark in all the multi-billion-shilling tenders currently being investigated.

National Assembly Committee on Energy chairman David Gikaria told People Daily his team was divided over sending the MD packing to ease the tension, with some members saying that, in it self, will not resolve the infighting.   

The Public Investment Committee chairman Abdulswamad Nassir said the committee had opened a probe into the corruption and tendering issues  and that both the board and the management would be summoned to appear.

Investigators, meanwhile, have opened a probe into what some sources say could be the country’s biggest corruption scandal at  KPC, allegedly  involving Sh70 billion.

The investigation is centered on claims of hugely inflated costs for procurement deals undertaken by the firm in recent past.

Past and present officials of the firm have reportedly been lined up for questioning starting this week in the renewed fight against grand corruption. 

Police have already profiled the targeted deals in the institution that is flush with cash considering its near-monopoly in the transportation and storage of petroleum fuels.

Special focus has been on the awarding of the most lucrative tender to Zakhem International, a Lebanese firm, to build a new pipeline in 2014 at nearly Sh48 billion — yet the contract price has been adjusted upwards by at least Sh2.7 billion.

The corporation is also under probe by two different parliamentary committees over the manner in which it secured  Sh35 billion loan for the new Mombasa-Nairobi pipeline expected to cost about Sh50 billion.

Last month the board stopped the management from paying a consultant Sh 3.8 billion which, it says cannot be explained.

Ngumi told a Senate committee that he had no details on how Nyara Consultants Company was contracted to work for the corporation and therefore could not sanction the payments.

Questioned process

“We are seeking your assistance, the management has decided to run the show without involving us, leading to the current predicaments,” Ngumi told the Senate committee.

He further told the committee that the Auditor General had also questioned the process in which the consultant was contracted to oversee the Mombasa/Nairobi pipeline.

“Procedurally, we are not allowed to interfere with procurement matters handled by the management, on this one we found it prudent to question,” he said.

But when he appeared before the PIC, managing director  Sang said that the expert scheduler (Consultant), M/s Nyara had talked with consultant working for the contractor, SLEC before arriving at the figure of Sh3.8 billion.

But appearing before the same committee, Petroleum principal secretary Andrew Kamau disputed the figure, saying that Nyara Consultants were not involved in the dispute settlement.

“The job of a scheduler is to speak to the contractor, engineer or engineer’s representative and come with a picture of what was supposed to happen at what point,” Kamau told PIC members.

Zakhem International has been demanding Sh4.4 billion penalty for delays in building the 450km pipeline.

Sang revealed that Zakhem International had slapped them with an extra Sh5 billion claim for delays in completing the project.

Details of the loan agreement make it mandatory that the money be paid quarterly, meaning that KPC has to part with some Sh1.34 billion quarterly. 

Despite President Uhuru Kenyatta having asked the Head of Public Service Joseph Kinyua, to inquire whether the claims by Zakhem had been settled or should be paid, no response was reportedly forthcoming. 

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