NAIROBI, Kenya, Jun 23 – The Energy Ministry has defended itself over accusations that the taxpayer could have lost Sh6 billion in a fresh oil scandal.
Energy Minister Kiraitu Murungi told a press briefing on Monday that the money referred to in one of the local dailies is Sh580 million and not Sh6 billion, and it arose from a change in the scope of work in the contract detailing the Mombasa-Nairobi capacity enhancement project.
“We were all concerned about the delay of the project (which was supposed to have been completed by August) so I ordered that it be implemented with no more extension on time and that it be commissioned by the end of October 2008,” he said.
The Kenya Pipeline Company (KPC), which was overseeing the project, was also directed to internally finance the cost overruns, which the Board Tender Oversight Committee said would help meet the project’s objectives.
The Minister, who was at pains to explain why the project, which was expected to improve the pipeline product flow rate to 880,000 litres per hour, was commissioned before its completion said several pumps need to be fitted before this capacity can be realised.
“The envisaged flow rate cannot be achieved without the installation of three AGO booster pumps at the Kipevu Oil Storage Facility (PS 14). This was an omission and currently the pumps are to be installed before the end of 2009,” he said.
After meeting the KPC Board, it was agreed that investigations into variations be carried out to determine whether there had been any ‘omissions and commissions’ and what actions needed to be taken.
Mr Murungi however disclosed that several senior managers at the Kenya Pipeline, who are believed to be involved, have already been sent packing.
At the conference, KPC acting Managing Director Selest Kilinda said that although the project is estimated to have cost Sh8.59 billion, they have paid claims worth Sh6.97 billion, while the reminder would be settled once the probe into the deal is completed.
“Pending claims are either being negotiated but some are estimates as they relate to time claims because of the delays in the project,” he said.
The Public Procurement Oversight Authority is reportedly carrying out independent investigations into the variations and once the final report is drafted, Mr Murungi said he would table it before the Parliamentary Committee on Energy for further action.
This alleged scam comes hot in the heels of another Sh7.6 billion rip-off which resulted from KPC’s decision to release fuel to Triton Petroleum without authorisation.