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Kenya Pipeline managers on the spot over fuel losses

Kenya Pipeline Company Chairman John Ngumi.

NAIROBI: The top management of Kenya Pipeline Company (KPC) has up to the end of this week to explain huge losses incurred by oil marketers when transporting petroleum products through its pipeline.

The directive from the board comes after oil marketers protested against alarming losses incurred in the six months to December last year.

It also comes as KPC Managing Director Joe Sang is this afternoon set to appear before the Ethics and Anti-Corruption Commission (EACC) in the ongoing probe over a Sh1.2 billion tender.

The MD is the last of eight top officials of the State-owned firm who have so far been interrogated by EACC.

At the centre of the probe is how the managers terminated a Sh1.2 billion tender awarded to Siemens, and later awarded to Zakhem Construction – the firm that is currently upgrading its pipeline from Mombasa to Nairobi.

When moving products through the pipeline, there are acceptable levels of operational losses incurred, but according to the oil marketers, there were heavy product losses in the course of last year, which pointed to the possibility of pilferage.

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The marketers, through the Supply Coordination Committee, had written to KPC’s management and Ministry of Energy officials expressing their concerns.

Pertinent questions

KPC Chairman John Ngumi said the board met last week and gave the management a week to come up with the way forward on how to handle the product loss issue that the State corporation has been grappling with for years.

“The board had a meeting last week and resolved that we would give management a week to come with a coherent explanation that we will listen to and interrogate,” said Mr Ngumi.

“As a board, we have been very concerned about the gain/loss issue. It is one that we have been mulling over for quite some time and have been pushing management to explain. The marketers are asking pertinent questions and that is what we have asked management to look into and report back to the board within a week.”

The losses are recovered from the consumers as they are factored in the fuel pricing formula that caps retail prices of super petrol and diesel, which factors in what is termed as operational losses during transportation on the pipeline as well as at KPC depots.

The company has already suspended one of its officials as it investigates what led to the losses last year.

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While he declined to speak on the disciplinary measures that would be taken against the suspended officials, Mr Ngumi said the board would take “stern action” over the coming weeks.

“We are taking it seriously and more will emerge in the course of this and next week,” he said.

“A lot of investigations are going on and there will be more action in the coming days as we settle the issue of product losses in the pipeline. The board has resolved that we must get to the bottom of this gain/loss issue once and for all.”

The losses can be due to leaks in the pipeline, if the calibration of the equipment is wrong or even outright theft.

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