Kenya Pipeline Company denies losing money in project

The construction of an oil pipeline by Kenya Pipeline Company near Jomvu in Mombasa. PHOTO |LABAN WALLOGA | NATION MEDIA GROUP

What you need to know:

  • Kenya Pipeline Company denied any underhand dealings when awarding the tender to Lebanese contractor Zakhem.
  • Kenya Pipeline managing director Mr Joe Sang says the company financiers release the funds directly to the contractor upon receipt of documents certifying work done.
  • Zakhem, the firm that won the tender, is blacklisted in several West Africa nations
  • Whistleblowers have accused KPC of discarding infrastructure that is still in good condition in order to afford corruption cartels opportunities to raid public coffers.

Kenya Pipeline Company on Wednesday denied losing billions of shillings in a project to build a 450-kilometre pipeline from Mombasa to Nairobi.

In a statement signed by managing director Joe Sang, the company also denied any underhand dealings when awarding the tender to Lebanese contractor Zakhem.

“No money has been lost. As at March 28, KPC has paid 75.6 per cent of the contract sum amounting to Sh34 billion against certified completed work of 82 per cent.

KPC financiers release the funds directly to the contractor upon receipt of documents certifying work done,” Mr Sang said.

He dismissed reports that the contract sum for the project — known as Line Five — would cost Sh53 billion.

“The sum is Sh48 billion. KPC is funding the project to the tune of Sh13.4 billion or 30 per cent of the contract sum. The company obtained funding of Sh35 billion based on the strength of its balance sheet,” the statement added.

The firm was reacting to a story in Wednesday’s Nation which showed that taxpayers could have lost Sh40 billion in the project.

Whistleblowers have accused KPC of discarding infrastructure that is still in good condition in order to afford corruption cartels opportunities to raid public coffers.
At the heart of the alleged fraud is the upgrade of the company’s pipeline to 16 inches.

Between 2008 and 2013, the company bought pumps and auxiliary equipment for a 16-inch pipeline.

But in a bizarre twist, it threw everything away and bought 20-inch pipes.

Whistleblowers say the 16-inch pipeline was to cost Sh16 billion, while 20-inch Line Five would cost Sh53 billion.

Mr Sang maintained that at no time had KPC sought to procure 16-inch pipes, noting that it had gone for the 20-inch pipeline after recommendations from an independent consultancy firm.

“At no time did KPC conceive laying a 16-inch pipeline from Mombasa. This is total fabrication,” he said.

Zakhem has in the past been cited for its long and largely opaque history with Kenya’s pipeline.
It has been blacklisted in some West Africa nations.

Mr Sang attempted to justify the need for the project saying it was necessitated by a study carried out by an independent firm which projected a rise in petroleum demand by 2020 from four billion litres in 2013 to 5.7 billion last year, eventually hitting the 6.8 billion mark in 2020.

“This rise in demand is largely due to the country’s economic growth and that of the region,” he said.