, NAIROBI, Kenya, Jun 11 – The Kenya Oil Refineries Limited (KPRL) has denied claims that the over Sh1 billion tussle between the company and oil marketer KenolKobil threatens financial stability of the refinery.
KenolKobil early this year took products worth Sh1.17billion on credit from KPRL, and put the latter in a tight financial position.
The oil marketer is alleged to have taken products without a valid letter of credit, against the sector regulations, and refused to pay in an effort to compensate itself close to Sh3billion it claimed to be owed by KPRL, despite a court ruling in favour of KPRL.
“Business is as usual and those are just rumours. KPRL operations are going on as usual but as you know challenges will always be there and differences too. This matter is already with the Energy Ministry and the Energy Regulatory Commission,” KPRL CEO Brij Bansal told Capital FM Business.
In what looked like a reprimand, KenolKobil was last month suspended from the Open Tender System (OTS) by the Ministry of Energy and Petroleum both as a buyer and a seller for four months until it clears all the debt to the Mombasa based refinery.
Bansal has also denied claims that Standard Chartered Bank has threatened to pull out from a Sh30billion agreement with KPRL signed in June last year, following its financial challenges.
The funds aimed at helping the refinery to switch from a toll system to a merchant system in July last year, where it now imports its own crude oil, processes it and sells to oil marketers at a profit.
“We are in continued discussions with the all the stakeholders and the bank is one of them. These are our partners and remember we signed the agreement while we were in a worse financial situation,” Bansal said.
The bank is said to have wanted to cancel the agreement after the oil marketers threatened to boycott from uplifting the refined products from the refinery from July this year hence further hurt KPRL’s operations.
In a letter to the Office of the President dated April 19 this year, the oil marketers had complained that inefficiencies at the refinery had made processed oil products more costly than those imported directly.
“The oil industry is however ready in all respects and committed to put in place the necessary measures for refined product importation into the country after June 30, to guarantee security of fuel supply for the country and the region’s requirements,” the letter read.
Oil companies are currently lifting about 65,000 tonnes of products from KPRL of its monthly refining capacity of 130,000 tonnes.