Politics of fuel: Raila wants oil deal probed, wonders why EACC is silent on weighty issue

Azimio leader Raila Odinga on November 20, 2023. [Emmanuel Wanson, Standard]

Azimio leader Raila Odinga wants the Ethics and Anti-Corruption Commission (EACC), Energy and Petroleum Regulatory Authority (Epra) and the Office of the Auditor General, to conduct comprehensive investigations into the government-to-government oil deal.

Raila called on the EACC to look into conflict of interest by government officials in the oil deal, bribery, kick-backs, criminal collusion through price fixing and other corrupt trade practices and violation of procurement laws in the recruitment of suppliers and their local agencies.

“We take note that Chairman Bishop David Oginde and the Ethics and Anti-Corruption Commission have been silent over the goings on in the petroleum sector. The challenge is on the Chairman to start working on the matters raised,” he said.

He urged Epra to uphold its mandate and utilise the independence bestowed on it in Section 9(3) of The Energy Act which states that the Authority shall be “independent in the performance of its functions, exercise of its powers and shall not be subject to the direction or control of any person or authority.”

“Under the Ruto regime, Epra has been reduced to being a price fixer and to enable predators in the government to exploit Kenyans by overcharging them for petroleum products,” the ODM leader said.

Raila wants the energy regulator to investigate consumer rights violations and corrupt trade practices and the Auditor General to scrutinise procurement processes and pricing criteria.

In his dossier over the oil deal last week, the Azimio leader accused the Ministry of Energy of collusion with private companies.

He alleged that these entities have been manipulating billing records by strategically altering the billing month, a deceptive practice designed to enable the oil firms to justify quotations of higher prices.

Raila said the scheme has directly resulted in inflated fuel prices, imposing an undue financial burden on Kenyan consumers and benefiting shadowy figures in government.

He also alleged corporate tax evasion by the three companies.

The former Prime Minister demanded transparency and called on the government to make public crucial documents, including the alleged G-to-G memorandum, Supplier Purchase Agreement, evidence that Kenya is paying for the oil in Kenya shillings and details of transactions involving the contentious oil shipment involving businesswoman Anne Njeri.

The oil companies, in a joint statement published in local dailies, defended the government’s position that the deal with Saudi Arabia and United Arab Emirates was above board, despite claims by the Opposition that the deal was only benefiting a few individuals in the government through high fuel prices, to the detriment of Kenyan consumers.

“This is not true,” said the OMCs in the statement yesterday. “There is an MoU between the Government of Kenya and the governments of the IOCs, also supported by long existing bilateral trade relations between Kenya and these two countries.”

The companies justified the signing of the import deal in March this year, saying most emerging economies had started to experience challenges obtaining adequate supply of dollars when the US Federal Reserve began raising interest rates on its Treasury bills in 2021, with resulting delays in payment for fuel products by oil marketing companies.

President William Ruto has also dismissed Raila’s dossier arguing the contract is above board.

“All those contracts are available in Parliament. The contracts are public. There are no secret contracts anywhere,” said Ruto in Bomet over the weekend.

National Assembly Energy Committee Chairperson Vincent Musyoka told The Standard that the crucial documents in the G-to-G deal were received by the committee months ago. Musyoka said the allegations by the former prime minister are misguided.

“The documents that are relevant as far as the committee is concerned are those showing competitiveness and figures like freight on premium per metric tonne. Those things came to us a long time ago,” he said.

“Without fear of contradiction, I would say the former prime minister is clueless when it comes to this issue of G-to-to-G. I think he has been fed information by people who do not attend committee meetings,” he added.

The Mwala MP argued that the motive of the oil deal as presented before the committee was not to lower the cost of fuel at the pump but to ensure security of supply. 

“By the time we turned to G-to-G, the petrol stations were running out of fuel. People confuse the actual price they pay at the petrol station and the landing cost,” said Musyoka.

He said Kenya has the best landing price for fuel in the region but due to the tax regime, consumers pay more than other countries in the region.

However, the Azimio leader raised concerns about the exclusion of the National Oil Corporation (NOC) from the deal, highlighting the unusual choice of private firms over a government-owned corporation with a legitimate stake in the petroleum industry.

“NOC has a legal mandate to participate in all aspects of the petroleum industry and is wholly owned by the Government of Kenya through joint ownership by the Ministry responsible for the petroleum function. How does Chirchir explain the exclusion of this corporation in favour of private firms?” Posed the Azimio leader.

But the committee chairperson said the ministry has not signed a contract with the three oil companies but they were contracted by the government that won the supply tender. He explained that the government’s role in the deal is that of guarantor in case of any problem.

“We have not signed any contract with these oil-supplying companies. They are transport companies. Their role is just to transport this product to us. It is the particular country that decided that they want to use the companies,” said Musyoka.

Raila challenged the oil companies to present proof of corporate tax compliance, emphasising that mere claims would not pass.

“Don’t tell us, show us,” he said.

“We hope the Kenya Revenue Authority is listening to our demand for evidence of corporate tax compliance by oil companies,” he added.

The Azimio leader condemned the unusual involvement of oil companies in addressing concerns that he argues should have been the government’s responsibility.

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