Deal gone sour: Arrest of energy bosses exposes deep rot in sector

EPRA boss Daniel Kiptoo, KPC MD Joe Sang and Energy PS Liban Mohamed who who were arrested over the alleged importation of substandard fuel. [File, Standard] A scheme to undercut a high-ranking government official in the multibillion oil procurement has exploded, claiming jobs of three petroleum sector bosses while exposing Kenyans to losses in what could be illegally acquired and highly priced petroleum products. The plot to circumvent the Government-to-Government fuel importation deal behind the back of a top government official and powerful oil marketing companies has now blown into a major scandal. Sources reveal that the dominant oil marketing companies, said to be proxies of some top State official, fought off the plan, nipping it in the bud, leading to Thursday's arrests. Daniel Kiptoo, the Director General of EPRA, Joe Sang, the Managing Director of Kenya Pipeline Company (KPC), and Mohamed Liban, Petroleum PS, were dramatically arrested on Thursday. The Sunday Standard established that nearly half a billion shillings were recovered in cash during the arrests of three top officials. On Saturday, the Office of the President admitted there was manipulation of data to sidestep the Government-to-Government fuel importation. Felix Koskei, President Ruto's Chief of Staff and Head of Public Service, said that the three officials had tendered their resignation. Koskei explained that the three bosses had procured fuel outside the G2G deal following manipulation of data on the status of petroleum products in the country. He claimed that the fuel was procured as an emergency consignment and was also exorbitantly priced and of poor quality. Kenyans had already been forewarned of higher prices following the conflict in the Middle East. The cargoes were brought in by Oryx Energy and One Petroleum, each bringing 60,000 tonnes. "Notwithstanding the stable fuel supply position, the President notes with grave concern that primary duty bearers responsible for administering the petroleum supply chain may have manipulated data on in-country fuel storks. This appears to have been done to exploit the rising global prices and public anxiety, thereby creating a false impression of impending shortfall," said Koskei. "This egregious misrepresentation is reported to have led to the irregular procurement of an emergency fuel cargo by the Ministry of Energy and Petroleum. The principal actors include the Principal Secretary of Petroleum, Director General of Epra and Managing Director KPC." Koskei added that the irregularly procured shipment of fuel was in blatant breach of the G2G framework and also at a price that is significantly above the contracted rates. A source close to one of the three executives said the crux of the matter had been whether Kiptoo, alongside the PS Liban and Wafula, the director of petroleum at the Ministry, had authority to import fuel outside the G2G framework. On the other hand, Sang found himself in trouble for allowing the allegedly unfit consignment to be discharged into KPC infrastructure for onward pumping to other OMC's to sell in the retail market. The source explained that on learning about the importation deal, one of the major players in the G2G arrangement raised a ruckus, including claiming that the fuel was sub-standard. According to the source, the company felt that it should have been given the opportunity to import from a secondary source such as oil producers outside the Gulf region away from the G2G deal. The firm also acknowledged petroleum products from the Middle East are coming at high landed costs due to higher insurance and freight costs. The source observed that the unfolding saga is more of a person in a higher office profiteering from the G2G deal "teaching the officials a lesson" and "it has nothing to do with public interest". The source also noted the oddity of the saga in the charges that have been leveled against the three officials. They are expected to be charged with economic crimes, which Koskei confirmed in his statement, and not offences under the Petroleum Act 2019. On surface, the scheme reeks corruption. However, President Ruto's allies turned foes Kiharu MP Ndindi Nyoro and former Deputy President Rigathi Gachagua hinted at the behind-the-scenes schemes, claiming that a top government official was sidestepped in the deal that has since unfolded through a high-octane drama that resulted in the arrests on Thursday and resignations on Saturday of three senior-most government officers manning the petroleum industry. Nyoro argued that what has been unfolding since Thursday are the makings of a fallout between the petroleum sector bosses and other higher-ranking government officials. "Kenyans need to know that those arrests are not fights about their well-being. It is a fight among elites. It is a fight among who eats what," he said at a press conference yesterday. "The arrests of the Epra CEO, KPC MD and the PS for Petroleum has very little to do with the welfare of Kenyans. It has everything to do with watu wadogo wamekula chakula ya mzee." Gachagua made similar claims, although arguing that the fuel procured outside the G2G framework was aimed at circumventing the high premium and freight costs associated with the G2G deal. He said the consignments, which other reports indicate had inflated premium and freight costs, could have played part in taming the surge in pump prices that will be announced on April 14. "When we (Kenya Kwanza) came to government, William Ruto came up with the G2G programme. But there is nothing like Government-to-Government. It is Kenyan companies buying petroleum products from the Middle East," he said, noting that two of the companies are owned by President Ruto's allies. "As we anticipate a crisis because of the challenges in Iran, the PS Petroleum CEO Epra and MD KPC, decided to source for cheaper fuel because G2G consignments have a fixed price... they decided to get cheaper fuel so that they can help cushion Kenyans from price hike. But the people running G2G reported to the President that these officials were bringing competition to him and he would lose his profit. They have been arrested because they have brought competition to William Ruto." Both Gachagua and Nyoro noted that one of the ways the government could minimise the impact of high prices this month would be to forego taxes. These include the reduction or removal of the 16 per cent Value Added Tax and reduction of the Road Maintenance Levy. Nyoro also noted that G2G had been fashioned to benefit a few people. This "business" he said, had now expanded, and that the same firm that has been handling the bulk of consignments imported under the G2G deal had been expanded to the exploration of Kenya's crude oil in Turkana and is set to receive major incentives including tax exemptions. Nyoro added that the recently published Special Economic Zone (Amendment) Bill 2026 had proposed to give firms in midstream and upstream petroleum operations the incentives accorded to companies operating in SEZs. Gulf Energy, the firm handling the bulk of fuel imported through G2G, is also the firm that took over the Turkana oil programme from Tullow Oil last year. Kenya has been experiencing a wobbly supply of petroleum products over the last two weeks, with petrol stations reporting outages amidst reports of hoarding by major oil firms in anticipation of high prices when Epra announces new prices mid-April. This, Koskei said, may have been to cook data to project a dire supply situation in Kenya and warrant activation of emergency protocols. "(It was) in complete disregard of established emergency procurement process and was of substandard quality," he said. "Such falsification of information and misrepresentation by primary duty bearers within the petroleum supply chain constitute serious breaches of public intrust and may amount to economic crimes under the Anti-Corruption and Economic Crimes Act and the Penal Code." Koskei said the matter has been escalated to investigative agencies for a "full and comprehensive inquiry". Other than the three bosses who have resigned - although sources intimated they were pushed out - and who might now be facing prosecution, Koskei also said that the State Department of Petroleum had initiated administrative action against Joseph Wafula, deputy director of petroleum. He also said KPC had commenced due process against Joel Mburu, supply and logistics manager.

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