A KenolKobil pump station in Nairobi. The High Court on Monday issued an injunction blocking the oil firm from transferring or entering into any sale agreement with Puma Energy or third parties until a suit lodged by KPC is heard inter-parties on September 24. Photo/FILE
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The High Court on Monday issued an injunction blocking the oil firm from transferring or entering into any sale agreement with Puma Energy or third parties until a suit lodged by KPC is heard inter-parties on September 24.
KPC is demanding Sh2 billion from KenolKobil, arising from services rendered in transporting and storing the firm’s oil products between June 2009 and September 2010.
Mr Justice George Odunga warned KenolKobil against sealing the deal with Puma Energy, divesting itself from any of its business or facilitating transfer of shareholder’s interest to the foreign company.
KPC was also directed to serve KenolKobil with court papers to enable them respond to the suit.
The corporation, in an affidavit sworn by KPC managing director Selest Kilinda, says KenolKobil owes it Sh653 million and $16 million (Sh1.36 billion) arising from the unpaid invoices for the transportation and storage agreement during the 16 months.
KPC is further urging the court to direct KenolKobil to pay all the money found to be outstanding to KPC with an annual interest of of 14 per cent after a reconciliation ordered by the court.
Swiss-based Puma Energy’s bid to take over oil marketer KenolKobil is facing more legal challenges after Kenya Pipeline Company obtained court orders stopping the deal.
The High Court on Monday issued an injunction blocking the oil firm from transferring or entering into any sale agreement with Puma Energy or third parties until a suit lodged by KPC is heard inter-parties on September 24.
KPC is demanding Sh2 billion from KenolKobil, arising from services rendered in transporting and storing the firm’s oil products between June 2009 and September 2010.
Mr Justice George Odunga warned KenolKobil against sealing the deal with Puma Energy, divesting itself from any of its business or facilitating transfer of shareholder’s interest to the foreign company.
Through lawyer John Ohaga, KPC asked the court to order the oil marketer to provide security equivalent to its claim for the due performance of any decree the court may issue against them.
However, the judge declined to order the company to deposit of security, but certified KPC’s application urgent and directed that the dispute be heard during the court’s vacation.
The parastatal was also directed to serve KenolKobil with court papers to enable them respond to the suit.
The corporation, in an affidavit sworn by KPC managing director Selest Kilinda, says KenolKobil owes it Sh653 million and $16 million (Sh1.36 billion) arising from the unpaid invoices for the transportation and storage agreement during the 16 months.
KPC is further urging the court to direct KenolKobil to pay all the money found to be outstanding to KPC with an annual interest of of 14 per cent after a reconciliation ordered by the court.
On Tuesday, KenolKobil group chief executive Jacob Segman announced that shareholders had lost Sh2.9 billion in market value since the firm reported that it had sunk incurred a net loss of Sh3.9 billion in the half year to June 2012.
The injunction comes in the wake of a similar order by the Industrial Court restraining KenolKobil from closing the Puma transaction until a dispute with more than 200 non-unionsable workers is determined.
The employees blocked the deal after persuading the court that the Puma Energy would restructure the firm and send them packing.
The workers have also been allowed to pursue contempt of court proceedings against general manager David Ohana for defying the court orders by sacking them.
Majority shareholders, estimated to own about 70 per cent of the firm, agreed to cede their shares to Puma Energy, obliging minority shareholders to sell their stakes at an agreed price or have no say in the firm.
Mr Segman said the Swiss firm would complete its due diligence — investigation of a business prior to signing a contract — this month paving the way for negotiations.
“If the due diligence and subsequent negotiations are satisfactory, then Puma Energy may proceed with the transaction subject to applicable regulations,’’ said Mr Segman.
The transportation and storage agreement has been a drawn out battle. On January 26, two judges allowed an appeal by KPC and set aside Sh5.6 billion awarded to KenolKobil by an arbitrator for an alleged breach of contract.
Judges—Daniel Musinga and George Kimondo - referred the dispute to the sole arbitrator and seasoned lawyer Ahmednasir Abdullahi for reconsideration.
“We are satisfied that we should disturb the award for being so inordinately high as to represent an erroneous estimate,” ruled the judges and declined to uphold a counter-claim of Sh1.6 billion awarded to KPC by the arbitrator.
Mr Abdullahi had on December 10, 2009 ordered KPC to pay the oil marketer Sh2 billion and another $43,290,085 (Sh3.6 billion) for losses arising from being denied the use of KPC’s Kipevu terminal in Mombasa.
The dispute was triggered in 2005 by an increase in the tariffs charged by the parastatal to oil companies for use of the facilities.
KenolKobil contested the new tariffs prompting KPC to shut out the oil marketer from use of storage and pipeline facilities.
However, the oil marketer complained that it could not transport its products upcountry, leading to near dry-out of its petrol outlets, and was awarded the Sh5.6 billion by the arbitrator.
KPC lodged an appeal accused the arbitrator of failing to determine the dispute in accordance with the contract between the parties.
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