Triton ghosts linger on as KPC pays KenolKobil Sh4 billion : The Standard

The Kenya Pipeline Company is set to pay oil marketer KenolKobil Sh4.3 billion to settle a debt that has been subject to a long-running court case. The company says it has set aside the amount to pay the oil marketer, a move that has led to its profit before tax fall by more than 50 per cent. The company reported a profit before tax of Sh5.14 billion for the year to June 2019 compared to Sh12.36 billion in the year to June 2018.

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KenolKobil had in 2006 gone to court claiming KPC had breached an agreement the two firms had on the use of the Kipevu Oil Storage Facility (KOSF) by allowing Triton to use more than its allotted share of space at KOSF and in turn reducing space available to other oil marketers. KenolKobil accused KPC of failing to facilitate discharge of its products worth Sh9 billion from ship tankers due to unavailability of space, contrary to their agreement. A tribunal had in 2009 ordered KPC to pay Sh4.6 billion but KPC appealed. The case is currently at the Court of Appeal.   KPC acting Managing Director Hudson Andambi said the company decided to pay the money and the money was set aside in the financial year to June 2019. “A drop in the profit before tax in 2018/19 to Sh5 billion is attributed to on-boarding of new infrastructure, increased depreciation and provisioning of a KenolKobil debt of Sh4.3 billion,” he said.

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“KenolKobil case has lingered on in the company’s books for too long and it was found prudent that we provide for it so that we can get it out of the way, which resulted in a big dip in our profits.” He spoke when KPC management appeared before National Assembly’s Committee on Energy on Thursday. At the meeting, issues that have plagued the firm in the recent past were replayed, with the MPs pressing management for answers. Fraudulent These include an oil spill in March at Kiboko in Makueni County and a siphoning of fuel in July at Mlolongo in Machakos County.

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KPC and pipeline contractor Zakhem International are also being investigated by the Directorate of Criminal Investigations for contract variation. KPC said it planned to install a leak detection system for its entire pipeline infrastructure, including the new Mombasa-Nairobi line, but this was halted on allegations of fraudulent procurement. Andambi admitted that the company has major problems many of them historical but said there are attempts to clean up the company. “It is true that KPC has major problems and these are mostly tied to historical culture and it is not easy to change a culture,” he said. “When I went to KPC, I took some steps to make sure that we start changing and streamlining the operations of the company. I went around all stations and talked to staff members and they had uncountable issues concerning human resource malpractices that resulted stagnation among many, unfair promotion for some and many other issues.” He added that there are measures being put in place to correct this as well as increase controls on procurement processes and increase oversight on contractors once they have been awarded contracts.

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Kenya Pipeline CompanyKenolKobilKPCTriton