Oil firm owes govt Sh2.3b

February 19, 2009

, NAIROBI, Kenya, Feb 20 – Petroleum marketing firm Kenol-Kobil owes three State parastatals Sh2.3 billion, Parliament has been told.

In a Ministerial statement read by Energy Assistant Minister Mohammed Mahamud, the fuel company allegedly owes Kenya Pipeline Company (KPC) Sh1.2 billion.

Mr Mahamud also claimed that the figure arose from “failure to pay revised tariff for use of Kipevu Oil Storage Facility (KOSF), withheld payments to KPC by awarding rebates to themselves and illegal demurrage claims.”

Another Sh497 million is owed to the Kenya Petroleum Refineries Limited, after Kenol-Kobil allegedly refused to pay new processing fees for crude oil which was introduced by the government in 2006.

“Kenya Ports Authority (KPA) has informed the Ministry of Energy that they are owed by Kenol – Kobil Sh564 million as of March 1, 2008 for services rendered,” he added.

The Ministry was responding to a question raised by Yatta MP Charles Kilonzo, who wanted to know why the government was still awarding contracts to the oil marketer.

“Whereas the Government has not awarded any contract directly to Kenol – Kobil, both KenGen (power generating company) and KPLC (Power and Lighting Company) – both under the Energy Ministry – have running fuel supply contracts with this group,” said Mr Mahamud.

“There are no other companies that owe monies to the Government. They are all paying their processing fee to KPRL, storage and transportation fees to KPC and to KPA for ship berthing and doring services,” said the Assistant Minister.

KPC and KPRL have been involved in a protracted fees payment dispute with Kenol-Kobil, a matter that is currently pending before court.

MPs sought to know why the government had not taken action against the company, and Speaker Kenneth Marende ordered the Minister to produce the respective court orders.

The Speaker questioned whether the court order barred the government from blocking future transactions with the oil firm, after MPs argued that the government would be within its rights to stop offering services to the company.

The debate is expected back in Parliament next week when the government produces the court order.


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