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House team questions Kiraitu over Sh14b project

By | July 9th 2009 at 00:00:00 GMT +0300

By Alex Ndegwa

A parliamentary committee is demanding an assurance that a Sh14 billion expansion project by Kenya Pipeline Corporation (KPC) will not be mired in corruption like another that saw top managers fired.

The committee sought assurance from Energy Minister Kiraitu Murungi as it emerged KPC had restarted negotiations with banks for a Sh8.2 billion loan, which is part financing for construction of a parallel pipeline to Western Kenya.

KPC is expected to provide additional Sh6 billion.

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The deal was scuttled earlier this year by multi-billion shillings Triton scandal, which prompted the consortium of local banks to withhold the loan, citing lack of confidence in KPC’s management.

Yesterday, Rarieda MP Larry Gumbo, a member of the Energy, Communications and Information Committee, said he hoped the latest venture would not turn out to be yet another fiasco, like the Line 1 Capacity Enhancement-pumping Project.

Radical surgery

Audit experts estimate the controversial project, which has cost several top managers their jobs following allegations of financial impropriety, would cost the taxpayer up to Sh5 billion in inflated costs.

Mr Kiraitu told the committee during the scrutiny of the ministry’s Sh31 billion budgetary allocation at County Hall, Nairobi, it was inexcusable for the company to make losses adding, "we are doing radical surgery at KPC".

The minister said those axed include heads of departments and engineers. "There was professional negligence and many errors were committed. We have restructured the board and most of the heads of departments have gone home. Their jobs will be advertised because we want top-of-the-notch managers," he told the team chaired by Karachuonyo MP James Rege.

Kiraitu said it was now evident the Line 1 project could not achieve projected 880 cubic metres per hour since its maximum capacity was 831 cubic metres per hour.

Move defended

Manyatta MP Emilio Kathuri questioned why the ministry had commissioned a Sh12 million study on behalf of KPC to evaluate the viability of a new pipeline.

The MP argued KPC should foot the bill even as he questioned its rationale since the project was underway. But Kiraitu defended the move saying the study was part of the ministry’s planning process. He explained Kippra had started the survey last year and the funds were to complete it.

The minister also defended plans to construct Sh700 million headquarters of the National Oil Corporation. He said the building would save costs since it will house the ministry as well as other parastatals that have been renting offices.

Kenya Pipeline Corporation KPC Kiraitu Murungi Triton scandal
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