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The Government has admitted that leading oil company Kenol-Kobil owes
three State parastatals Sh2.3 billion. Energy Assistant Minister
Mohamud Mohammed said failure by the two companies to pay as expected
for services rendered has created an uneven playing filed for other oil
marketing companies.
The companies owed include the Kenya Petroleum Refineries Limited (KPRL), Kenya Port Authority (KPA and the Kenya Petroleum Company (KPC). He said KPRL is owed Sh497 million as fee arrears for domestic processing. As at December last year, Kenol-Kobil arrears to KPC, including interests, stood at Sh1.2billion, which accrued from failure to pay the revised tariff increase for use of Kipevu Oil storage facility.
The interest has also accrued from withheld payments to KPC by awarding rebates to themselves and illegal demurrage claims, allegedly incurred for shipments that could not be discharged into KPC facilities after the company disregarded ullage allocation arrangements at the Kipevu Oil Storage facility.
The minister further stated that Kenya Ports Authority (KPA), had reported to the ministry that it was also owed sh564million by the two companies as at March 1, last year, for services rendered. Mr Mohammed told the House that both Kenol-Kobil companies said the Ministry of Energy had moved in following complaints of non-payment of the fees, but were cut short by a court order obtained by both firms. He said when the dispute arose between KPRL and the two companies, the ministry intervened by excluding Kenol-Kobil from participating in the Open Tender System (OTS), as it was considered unfair for them to continue importing crude oil for domestic processing without paying the new processing fees.
Mohammed was responding to a question by Mutito MP Charles Kilonzo, who demanded for a ministerial statement on contracts to companies that have refused to pay fees for services rendered.
Mr Kilonzo also wanted to know what action was being taken against the two companies for refusal to remit fees to KPRL, KPA and KPC, and also state if there were other companies that owe monies and have refused to pay.
Mohammed said the Government does not award contracts to oil companies for importation of crude and refined fuels. He explained the Government’s role was merely to preside over the tendering by inviting and opening the bids. He said, in tandem with the tendering rules, the Energy ministry informs all the oil marketing companies of the winners of the tenders who are then required to import the tender quantities.
Mohammed said it was through the OTS process that the Kenol/Kobil group of companies have continued to participate and win many tenders for processing by Kenya petroleum Refineries Limited. He told the House the relationship between KPC and oil companies is governed by a Transport and storage Agreements (TSA), signed and executed between KPC and all individual oil-marketing companies.
He said the current version of the TSA became operational mid 2006 and was signed by all oil-marketing companies with the exception of Kenol-Kobil group. Instead Keno-Kobil sought and obtained an injunction against KPC.
The minister said that, whereas the Government has not awarded any contract directly to the two companies, both KenGen and KPLC have running fuel supply contracts with the group.
He, however, insisted there was no evidence that the arrangement can lead to shortage of the fuel in the country. He said there were no other companies that owe monies to the Government.
PetrolWorld 200209 Source: Standard Kenya
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