Industry

Contractor sues KPC over pipeline project

KPC

Oil storage tanks at the Kenya Pipeline Company, Industrial Area, Nairobi. Photo/FREDRICK ONYANGO

Construction of the Sh13.4 billion parallel oil pipeline from Nairobi to Eldoret has been stopped, pending the conclusion of a suit brought by a contractor against Kenya Pipeline Company.

Triple Eight Construction has sued KPC and China Petroleum Pipeline Bureau, the firm that won the lucrative tender to construct the 345 kilometre Western Kenya multi-product fuel pipeline.

Triple Eight has accused KPC and China Petroleum of tampering with the international tender for the construction and upgrading of the pipeline.

It said that KPC in cahoots with China Petroleum, substituted its name with other construction firms as local sub-contractors in the project in disregard of Public Procurement and Disposal Act 2005.

Triple Eight argues that after China Petroleum was awarded the contract, a sub-contract agreement was to be signed between the parties in preparation for the commencement of the project.

The contractor said it fulfilled all the conditions necessary to work with China Petroleum.

However, Triple Eight says it moved to court after the Chinese firm purportedly forwarded names of four companies to KPC for consideration as sub-contractors.

Those include; China Jiangsu International, China Huashi Enterprises Corporation, Burrell International and Machine Centre.

Triple Eight managing director, Simon Waburi, says that the substitution was unlawful.  

“The substitution is an attempt to steal a match on Triple Eight by preventing them from carrying out works under the tender,” he said.

Syndicated loan

The new development has thrown KPC into disarray given that the construction, partly financed by a syndicated loan provided by a consortium of banks, was set to begin soon.

After completion, the Nairobi-Eldoret pipeline will initially pump 390 cubic metres of fuel per hour concurrently with the existing pipeline capacity of 210 cubic metres per hour.

Fuel flow rate to western Kenya will increase since the region is currently is served by an eight-inch diameter pipeline from Nairobi to Burnt Forest where it narrows to six-inches to Eldoret on to Kisumu.