Auditor-general Edward Ouko: "It has not been possible to confirm whether or when the company will be able to recover the amounts due from the oil company". PHOTO | FILE
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The debt, which has been subject to arbitration for over seven years now, could significantly hit the corporation’s bottom-line.
The auditor-general says that a Sh4.1 billion debt that oil marketer KenolKobil has owed Kenya Pipeline Company for years should be provided for in the State corporation’s books as a doubtful claim.
The debt, which has been subject to arbitration for over seven years now, could significantly hit the corporation’s bottom-line. The amount is equivalent to 58 per cent of the after-tax profit that KPC reported last year.
Auditor-general Edward Ouko in his comments on KPC’s financials points out the uncertain recoveries that may continue to weigh down the firm involved in capital intensive plans.
“The balance of Sh10.6 billion as at 30th June includes an a mount of Sh4.1 billion due from an oil marketing company, dating back to year 2009 that is subject of a court dispute. It has not been possible to confirm whether or when the company will be able to recover the amounts due from the oil company,” Mr Ouko said on his audit opinion for KPC for the year ended June 30, 2016.
The auditor general also expresses doubt on KPC’s ownership of three plots for which it is yet to get tittle deeds, decades after they were acquired.
The plots valued at Sh1.9 billion include a section of the KenPipe land where the headquarters are located as well as where the storage tanks near the Jomo Kenyatta International airport are situated.
KPC managing director Joe Sang said the firm “had already acquired all the relevant documentations” and is at ‘advanced stage to have the lands titled.’
“We have engaged the relevant parties and all the titles are being process. The land which the new Nairobi tanks are was forcibly acquired in the 90’s by government on security/safety grounds while the one on Embakasi estate are awaiting renewal of lease. This one at the headquarters and parking were forcibly acquired by government from previous owners after the fire of 1982. In the godowns that were operating next to the current Nairobi terminal, the tittles are at a very advanced stage to be issued by KPC,” Mr Sang said.
According to Mr Ouko’s report, two titles are currently being held by the Kenya Airports Authority while their true ownership and value remains uncertain.
“Included in the property, plant and equipment and leasehold land balances of Sh43.5 billion and Sh4.9 billion respectively, are parcels of land valued at Sh1.9 billion for which the company acquired but have no tittle deeds.
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