KenolKobil’s annual report shows it booked the impairment in the second half of 2016 in addition to Sh400 million written off in the first six months of the same financial year and Sh146.7 million in 2015.
The firm has for years been claiming Sh3.1 billion from the defunct refinery, as compensation for product losses incurred due to inefficiencies at the Mombasa-based facility.
Despite the sustained writing off the refinery debt, Kenol Kobil posted a 19.8 per cent increase in net profit to Sh2.4 billion for the year to December.
KenolKobil #ticker:KENO has written off from its books an additional Sh200 million from a hefty debt owed to it by the defunct Kenya Petroleum Refineries Ltd (KPRL) as the oil marketer moves to fully disengage from a dispute dating back 16 years.
The oil marketer’s annual report shows it booked the impairment in the second half of 2016 in addition to Sh400 million written off in the first six months of the same financial year and Sh146.7 million in 2015.
KenolKobil has for years been claiming Sh3.1 billion from the defunct refinery, as compensation for product losses incurred due to inefficiencies at the Mombasa-based facility.
The KPRL is demanding Sh1.2 billion from the oil marketer for allegedly defaulting on payment for petroleum products, leading to a stalemate, which has seen KenolKobil’s management decide to write off the doubtful debt.
“The matter is the subject of discussions between oil marketing companies and the government and the impairment has been as a result of delays in the recovery of the balance,” KenolKobil says in its latest financial report.
The dispute at one point saw the government lock out the oil marketer from both the Open Tender System and allocation from the refinery, the two main sources of procuring fuel.
David Ohana, KenolKobil chief executive, in an earlier interview with the Business Daily said the firm entered into a product-sharing agreement with the KPRL but because of old machines, the refinery was unable to meet their obligations.
The two parties reached an out-of-court settlement in 2013 but Mr Ohana said there has been “no progress from government and we do not want to go the legal route”, hence the board’s decision to write off the disputed debt.
Despite the sustained writing off the refinery debt, Kenol Kobil posted a 19.8 per cent increase in net profit to Sh2.4 billion for the year to December.
This growth in profit was supported by increased sales which went up by 16.9 billion to close the year Sh103.4 billion.
The increased revenue resulted from the NSE-listed company opening 30 new stations in the year as well as benefits from international oil price changes. KenolKobil has operations in Kenya Rwanda, Burundi, Ethiopia, Uganda and Zambia.
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Note: The results are not exact but very close to the actual.
