KenolKobil seeks to wind up KPC over Sh4.9b debt

By Wahome Thuku

The Kenya Pipeline Company now faces imminent threat of being wound up over a Sh4.9 billion debt.

A winding up petition against KPC has been filed at the High Court in Nairobi by two sister companies, KenolKobil Ltd (formerly Kenya Oil) and Kobil Petroleum.

The petition was filed through Shapley Barret and Company after futile efforts to have KPC honour the award granted in December 2009 after arbitrations.

KPC was in December 2010 ordered by an arbitration tribunal to pay the oil dealer Sh4.6 billion for breach of an agreement in fuel storage by allowing the Triton Petroleum to use its Kipevu facility in Mombasa as a warehouse.

The arbiter, Ahmednasir Abdullahi, ruled that by allowing Triton to use the facility to store its petroleum products four years ago, the parastatal had reduced the space available in the industry.

The company was ordered to pay $37,909,879.50 (about Sh3 billion) to KenolKobil Ltd and Sh1,886,494,783 to Kobil Petroleum after the arbitrator found that the oil dealers had lost consumer goodwill, marketing campaign and financial goodwill.

KenolKobil took KPC to court in 2006 over failure to facilitate the berthing of various ships carrying its petroleum products and demanded Sh9 billion in damages.

Deposit money

It argued that according to the Memorandum of Understanding, no other company would be allowed to use the facilities during the duration of the agreement.

KPC applied for the execution of the order to be suspended as it filed an appeal at the High Court.

The State corporation argued in the application before High Court judge Philomena Mwilu that the amount was substantial and unjustified.

The application was granted on January 28, on condition that KPC deposits the whole amount in a bank account jointly held by its advocates and those of the two oil firms on or before February 10, this year.

KenolKobil Managing Director Jacob Segman said KPC did not deposit the money within the stipulated time, prompting them to file the winding up proceedings.

He said they had applied to the company for the payment of the money as set out in the final award but the company had failed to pay the full amount or part of the money. The petition will be heard on July 15