Mystery of missing oil billions deepens

President Kibaki sent Kenya Pipeline Company (KPC) top dogs packing as details of potentially massive losses by local and international firms began to emerge.

The parastatal is on the wrong side of a saga in which oil dealer Triton collapsed with billions of shillings owed to KCB, other dealers and international financiers.

Energy PS Patrick Nyoike was on Friday summoned to State House ahead of a stakeholders’ crisis meeting he was supposed to chair at Nyayo House before the announcement.

At the Nyayo House meeting chaired by ministry official Paul Ngatia, the government admitted criminal activities had been taking place at KPC, something some oil marketers had long maintained.

The mystery that continues to surround Triton, a fast-rising dealer whose colourful public functions have attracted the political who’s who, threatens to unravel the state-run oil import scheme.

A paper trail seen by the Sunday Nation indicates that a huge oil shipment worth billions of shillings and financed by KCB disappeared from the Kipevu Oil Storage Facility (KOSF), leaving the indigenous banker groping about to seize the assets of the company linked to its once high-flying executive chairman, Yagnesh Devani.

Triton had won the October (for December delivery) oil importation tender for the industry under the Open Tender System (OTS) where one player supplies most of the industry demand.

Last week, a court order putting a caveat on fixed and movable assets of Triton was published in the press by financier KCB amidst unconfirmed reports that Mr Devani had gone to India.

“His whereabouts are unknown as he is alleged to have fled the country on or about December 10, 2008,” said KCB of the man, in papers filed in court.

Triton has interests in Dubai, Angola and most of the eastern Africa countries. The KOSF is owned by Kenya Pipeline, who were holding the fuel in trust for parties including financiers and dealers.

“KPC turned around to tell us they have no product for Triton financed by KCB, yet we have been receiving statements from them indicating products held in our favour,” an apparently distressed KCB official wrote to an oil company who had agreed to buy some of the fuel.

Several sources last week said that at least three KCB officials whose names this newspaper has were suspended over the affair. Ahead of sending KPC chief George Okungu on compulsory leave — interpreted to mean sacking — two officials were either sacked or suspended at the parastatal.

One of the intended purchasers of the cargo had on December 23 expressed “concern” over the physical presence of the shipment and asked for KPC’s formal confirmation.

Confirmation that no oil was available came on December 30: “This means a lot, and we shall get to the bottom of it as a bank.” KCB was accorded the dubious distinction of filing the first civil suit of this year against Mr Devani and Triton Networks Solutions Ltd.

In the suit KCB, which alleges Mr Devani has already disposed of his matrimonial home in Lavington, Nairobi, says he had executed guarantees and indemnity in their favour to the tune of over Sh2 billion.

Two companies alleged to be associated with Mr Devani, Triton Petroleum and Triton Energy, were placed under receivership between December 19 and 20, 2008 by KCB and pan-African PTA Bank, reported in the media to be owed over Sh700 million. Subsequent attempts to lift the status were dismissed in courts.

Unfortunately KCB says most the assets of the defendants are unknown and a support affidavit sworn by its relationship manager John Oringo says, “the plaintiff is not aware of any assets owned by either defendant (Mr Devani, Triton) sufficient to meet the amount demanded under the deeds of guarantee and indemnity.”

KCB is just one of the parties that are making claims against Triton. Last month, Engen, a petroleum vendor, wrote to Energy PS Patrick Nyoike demanding intervention over the failure to supply them with fuel despite making payments to them.

“This has directly cost Engen Kenya $286,908.22 (Sh22.4 million) & Sh901,558.31 in cash that would otherwise have been profitably turned around by now. They have put Engen under unreasonable duress, made us forgo sales and lose valuable time in the pursuit of this stock without results,” said the letter by managing director Caleb Ayiku.

KCB, a big bank, has a lending portfolio of Sh90 billion. Banks with a lower capital base would have been shaken to the core by such default.

Over its four-year existence Triton courted considerable controversy. Kenol Kobil and KPC have engaged in bitter, often public, exchanges over allegations that the firm has been taking up ullage (storage space) at KOSF despite its lack of a retail distribution network.

The oil company has often claimed that the firm amongst others occupied more than its allocation, forcing ships to queue offshore before they can discharge fuel. The Kipevu facility is normally used for short-term storage before pumping upcountry, and failure of ships to evacuate on time leads to delays in pumping.

“If the above is considered a fair game and a fair implementation of Ministry of Energy policies by KPC, then we are left speechless,” the firm wrote to Mr Nyoike in 2006.

Similar complaints, though less public, have continued, the latest being during the December fuel shortage. At the time Mr Nyoike insisted that Triton had very little oil at the depot despite the allusion by KCB to the contrary.

“Mr Okungu has revealed that the oil industry had been issued with false reports by some KPC employees,” Kenol said on Friday. KCB had forwarded stock statements to potential buyers of the cargo from KPC.

They wanted to sell 25,479.768 metric tonnes of diesel, 418.134 of super and 318.656 tonnes of jet fuel at a time there was a severe shortage. Kenya Airways issued a distress call over the situation and Wilson Airport operators were grounded.

“The first station was colourfully launch on 29th March 2004 in Mombasa following the identification of a need to serve customers who had been supporting us in Triton Kenya Ltd in other segments of fuel business,” says the Triton website which was still active last week.

The fate of the popular Trigas and its fuel depot under construction at Mombasa depends on how the receivership by PTA and KCB pans out.

But in the meantime after the apparent breaching of the collateral management agreement between banks and vendors, future financing of fuel imports is uncertain, and the innocence of Energy ministry officials in doubt.