Kenya Petroleum Refineries Limited CEO Brij Bansad when he appeared before Energy Committee at Continental House October 3, 2013. Photo/Diana Ngila
The Kenya Petroleum Refineries Limited has paid $4.4 million to Essar Energy, which is demanding a further $2.2 million from the refinery for technical services.
The amount would bring to $6.6 million the fees the refinery has paid its 50 per cent owner to date, against $3 million that Essar has invested in the upgrade of the facility.
“The $2.2 million covers February 2012 to end of January 2013. We have not been able to pay because of challenges we have had,” KPRL chief finance officer Stephen Mbui told the Energy Committee of Parliament.
KPRL managing director Brij Bansad said the technical services agreement was similar to the one that Shell had with the oil cleaner prior to the entry of Essar.
However, he was unable to explain the specific actions Essar had taken towards modernising the refinery, which requires Sh26 billion.
Mr Bansad said the agreement was being renegotiated to remove the annual fixed fee of $2.2 million following the closure of the refinery.
“No business is going on…we have told Essar we can’t pay fixed fees in view of the change of business environment,” he told MPs.
Mr Mbui said the refinery had a net book value of Sh5 billion with the land valued at Sh13 billion. The refinery is Sh16.9 billion in debt and is operating on bank overdrafts.
Mr Bansad said the company borrowed $38 million from local banks to finance its operations: $11 million to Barclays Bank and $5 million each to Citi and CBA.
“We have a balance of $62.8 million to be paid to them. We have products in our tanks valued at $68.8 million. Once they are sold we will pay them,” he said.
