How State firm is frying in its own oil

Former National Oil Corporation of Kenya (Nock) managing director Sumayya Hassan-Athmani’s exit leaves a cloud of uncertainties in the corporation charged with fuelling the engines of the economy.

That Ms Sumayya opted to quit on her own volition after surviving several attempts to kick her out of Nock raises the big question of who finally pushed the resilient lawyer overboard.

The dust she leaves behind now shifts attention to the corporation, which is tasked with, among other roles, providing petroleum supply security and championing the upstream oil sector in Kenya.

Questions are being raised also on whether it is equal to the onerous role of ushering the country into the league of oil producers in the near future.

The government agency, which ought to play a pivotal role in the upstream oil dealings as Kenya seeks to reap from the black gold has, however, been literally frying in its own oil with wrangles and mismanagement defining its slippery path.

It is not only Ms Sumayya whose tenure has been full of intrigues. Her predecessor, Mwendia Nyaga, left under a similar cloud of controversy in September 2010 amid claims of boardroom disagreements that saw him decline the junior position of deputy managing director.

MARKED WOMAN

Exactly two years after stepping into Mr Nyaga’s shoes, Ms Sumayya was apparently a marked woman. The Ethics and Anti-Corruption Commission recommended her prosecution together with her supplies manager Maimuna Kassim for abuse of office and tender irregularities.

The EACC accused the duo of using direct procurement as opposed to open tendering to pick the company that was supposed to supply it with oil.

They, however, escaped prosecution after the recommendations made in August 2012 failed to materialise. No charges were pressed.

Insiders at Nock, who requested anonymity, said the former managing director made good use of her tenure, which was more than a decade, to craft and fortify extensive networks that became hard to break.

“At one point, even the board could do nothing to the boss (Sumayya). She had everyone under her control and people just feared her,” the source told Smart Company.

“I think the change in board leadership with the change in chairmanship and the exit of the former energy Cabinet secretary (Davis Chirchir) must have dealt a heavy blow to her, making her exit inevitable.”

Indeed, it is the corporation’s board that in January sent Ms Sumayya on forced leave to pave the way for an audit in light of a Sh270 million loss booked for the first half of the current financial year.

Nock’s board blamed the management for interfering with the planned forensic audit of the corporation that was scheduled to take place in November last year.

MAKING A COMEBACK

The managing director would later make a comeback 20 days later after a Monday evening pronouncement by Deputy President William Ruto reversed the decision by the board. The DP had met the Muslim community at the height of the campaigns in the run-up to the Malindi by–elections in February.

With the DP’s announcement, Ms Sumayya survived another ouster bid thanks largely to politics. This came two years after the gender card saw her second term renewed, with then Energy Cabinet Secretary Chirchir pegging the decision to retain her on the need to maintain gender balance in the appointment of heads of parastatals within the energy and petroleum docket.

This seemingly unending tale of wrangles is thus raising founded concerns on whether the corporation’s management is able to spearhead the country’s drive towards joining the league of oil producers in the near future.

Undoubtedly, a robust national oil company would be critical in this mission. These concerns are emboldened by the fact that the corporation has shirked its responsibility of regulating the market alongside the Energy Regulatory Commission.

Efforts to reach Petroleum Principal Secretary Andrew Kamau to ask him if Nock has the requisite capacity to play the crucial role were fruitless as our phone calls and short messages went unanswered.

BLEAK FUTURE

Nock chairman Daniel Wamahiu, however, declined to comment on the stability of the agency, referring us to the newly appointed acting Chief Executive MaryJane Mwangi.

“I am not this kind of a character who wants to make statements that should be made by other people. Let the acting CEO speak about any matter regarding oil,” Mr Wamahiu said.

Tenders and appointments being the bone of contention at the firm paints a bleak future for the government oil marketer.

An audit meant to have been done in November was frustrated several times, culminating in the suspension of Ms Sumayya to “pave [the] way for the audit”. Sources privy to the activities at the corporation told Smart Company that the forensic audit failed due to “interference by management”.

Last year, Nock won a lucrative deal to supply fuel lubricants and bitumen to government ministries and agencies in an exclusive arrangement that locked out private oil marketers.

The directive giving supply rights to Nock was issued through a letter written by chief of staff and head of the public service Joseph Kinyua to principal secretaries and copied to Cabinet secretaries on April 30, 2015.

LESSONS TO LEARN

The move meant that private dealers were locked out of the Sh300 billion, 10,000 kilometre annuity road construction project that was bound to consume tonnes of bitumen.

Kenya has a lot of lessons to learn from other oil-producing countries such as Malaysia, where the national oil company that is the equivalent of Nock explores, produces and develops oil and gas resources in Malaysia and abroad. 

Malaysia’s PETRONAS conducts onshore prospects in Canada, exploration in South America and deep-water drilling in Brunei, combining a broad portfolio of reserves and applying innovative technology solutions to maximise the country’s hydrocarbon potential.

It makes huge profits and is ranked among the 500 largest corporations globally.

In Saudi Arabia, another oil producer, Saudi Aramco, stands tall as the world’s most valuable company. The Ministry of Petroleum and Mineral resources monitors the firm but it is solely responsible for exploration, production, refining, chemicals, distribution and marketing and driving the oil business.

Similar ventures in China, Nigeria, Angola and other oil producers have ensured a streamlined management of oil revenues.