Sleuths join Kenya Pipeline oil spill probe as boss exits

Vivo Energy Kenya Managing Director Joseph Muganda (r) and GAPCO Kenya Managing Director John Macharia when they appeared before the National Assembly Energy Committee at Parliament on Tuesday. [Boniface Okendo/Standard]

Kenya Pipeline Company (KPC) yesterday said it had invited detectives to investigate losses of petroleum products worth billions of shillings.

This on the day its managing director announced he would not seek an extension of his term which expires early next year.

Chairman John Ngumi in a statement announcing the impending probe said the board had accepted Joe Sang’s intention not to have his term renewed, saying he had cited personal reasons for the decision.

This came even as oil marketers told the National Assembly Energy Committee that they would not absorb losses arising from the lost products.

“The board directed management to accord maximum cooperation to both the DCI (Directorate of Criminal Investigations) and the forensic auditors,” said Ngumi.

Independent auditor

He said the oil marketers would jointly conduct a forensic audit of the petroleum products in stock which has been at the centre of the unfolding dispute after it emerged that taxpayers have been paying billions of shillings to cover up a fuel theft scam at the State Corporation.

The marketers separately told a parliamentary committee of their frustration over the losses attributed to a fuel spillage and pilferage worth Sh1.16 billion.

An estimated 11.6 million litres transported by KPC through its pipeline from Mombasa cannot reportedly be accounted for.

The marketers argued that it is the duty and mandate of KPC to ensure that their systems are efficient to prevent such kind of losses and therefore the same cannot be passed on to them.

This came as KPC yielded to pressure for a forensic audit over the fuel loss.

The two parties are, however, yet to agree on who will conduct the audit even as December 31, deadline looms.

Vivo Energy Managing Director Joe Muganda, who doubles up as the head of supply for the oil marketers, called for an independent auditor.

“We have accepted to have the audit but we are yet to agree on who will carry out the audit. We need an auditor that will be agreeable to all the parties,” Muganda told the committee.

“KPC is a custodian and a transporter of the OMCs stocks and bears the heavy responsibility and duty of care. We do not believe force can be applied and this liability is not transferable.”

Although the losses are covered by CIC Insurance Group, KPC had intended to bill the marketers for the losses that may not be taken up by the insurer.

According to the Transport and Storage Agreement (TSA) signed with marketers, KPC indemnifies marketers when losses arising from faulty facilities and pilfering exceed 0.25 per cent of products by volume based on a six-month moving average.

At the same time, Vivo Energy, Be Energy, Gulf Energy, KenolKobil, Total, Gapco Oil and Hass Energy have differed with Kenya Airports Authority (KAA) over the alleged entry of foreign jet fuel suppliers at various airports across the country.

The oil suppliers claimed that ASM and Pacific Oil have been supplying jet fuel at low prices yet they don’t participate in the Open Tender System (OTS) and do not have the requisite licences.

The dealers said while they were not against healthy market competition, the two foreign companies enjoyed an undue advantage over them.

“We are not opposed to the Open Tender System, what we are requesting is a level playing field so that we all compete fairly in the provision of the fuel to the airlines,” Mr Muganda told the committee.