KPC seeks Ahmednasir ouster from Sh5bn battle with KenolKobil

The Kenya Pipeline Company (KPC) has turned its guns on Nairobi lawyer Ahmednasir Abdullahi, seeking his removal as the arbiter in a long-running Sh4.6 billion dispute with oil marketer KenolKobil.

Kenya Pipeline says Mr Abdullahi can no longer resolve the dispute to the satisfaction of the parties involved after he allegedly exposed his partiality in an interview with a local TV station.

KPC has filed a fresh petition in the High Court, seeking to kick Mr Abdullahi out of the arbitration accusing him of bias.

The oil transport company claims that Mr Abdullahi’s interview during a live newscast with a local TV station in June revealed that he is not capable of conducting the proceedings with the required impartiality.

During the interview, Mr Abdullahi faulted the State corporation for awarding a Lebanese firm, Zakhem, the multi-billion shilling tender to construct the new Mombasa-Nairobi large capacity pipeline.

“The said comments, which were made in the course of a live interview on national TV, clearly demonstrate that Mr Abdullahi does not continue to remain impartial and cannot undertake the reassessment of loss and damage as directed by both the High Court and Court of Appeal,” KPC said.

READ: KPC signs Sh43b contract with Zakhem for new pipeline

Mr Abdullahi further said during the interview that in contracts such as the Mombasa-Nairobi pipeline construction, officials from the procuring entity usually get a commission of 10 per cent of the total cost.

“Normally its 10 per cent, I said in my article when you give a contract like this there is no doubt in my mind there is a 10 per cent consideration,” he said in the interview. The contract is valued at Sh43 billion.

KPC now claims that the utterances prove that Mr Abdullahi believes KPC is run by corrupt officials.

The corporation now wants the High Court to either let it and KenolKobil find a new arbiter or to appoint one to determine the dispute.

Elgeyo Marakwet Senator Kipchumba Murkomen, was also present at the interview but he opted not to comment on the subject of kickbacks to procuring officials.

Mr Abdullahi was speaking against the award of lucrative tenders to overseas companies and overlooking Kenyan firms, a move KPC believes has shown he may have a score to settle with the state-owned firm as the arbitration proceeds. Mr Abdullahi is yet to respond to the suit.

Justice Fred Gikonyo ordered KPC and Kenol Kobil to appear before him on January 19, when the matter will be mentioned and to confirm whether both parties will have filed their respective responses.

Mr Abdullahi was appointed the arbiter for the dispute in 2009 after Nzamba Kitonga relinquished the duties following his appointment as chair of the Committee of Experts on the constitutional review.

He proceeded to award Kenol Kobil Sh4.6 billion in compensation for loss, damages and public relations costs in December 2009 after he found that KPC had breached the fuel storage contract it had signed with the oil marketer.

KPC appealed Mr Abdullahi’s decision in the High Court and the Court of Appeal in 2010, which directed that the matter be returned to the arbiter for reconsideration.

Mr Abdullahi had also awarded KPC Sh1.6 billion arising from a counterclaim to KenolKobil’s suit, but was to determine the matter afresh following the appeals.

The dispute revolves around KenolKobil’s claim that it had an agreement with KPC that assured the oil marketer of exclusive storage space at the Kipevu Oil Storage facility in Mombasa, but KPC allegedly extended the same space to other firms.

Kenol Kobil alleges that Triton Gas and other firms had been allocated more space than it in breach of the deal it signed with KPC.

KPC says in suit papers that it alerted Mr Abullahi of the intention to challenge his impartiality in the matter, but the arbiter dismissed their application.

“On July 15, when the parties convened before the arbitrator he announced that he had already considered the challenge to his impartiality and proceeded to deliver his decision in which he dismissed KPC’s contentions,” KPC added.

Gloria Khafafa, KPC’s legal officer, says that the parties are in the process of filing their written arguments to Mr Abdullahi, but want the entire arbitration process stopped until Justice Gikonyo determines whether a new arbiter shall be appointed.