The Auditor-General has raised concern over the loss of Sh1.3 billion annually that the Kenya Pipeline Company (KPC) pays the moribund Kenya Petroleum Refineries Limited (KPRL) for jobs not done.
In the fiscal 2021/22 audit, the auditor questioned why KPC was paying the amount to the company, which ceased operations about 10 years ago.
The Parliament ordered the Energy Cabinet secretary to dissolve KPRL before the end of this year to stop further losses of public funds.
“The payment of Sh1.3 billion annually for the use of its storage facilities, which were meant to refine petroleum products, is unnecessary considering the country currently imports refined products, not crude oil.
“We urge the minister in charge to expedite the dissolution of the KPRL and its Mombasa oil storage tanks and employees handed over to KPC,” said David Pkosing, chairperson of the Public Investment Committee on Commercial and Energy Affairs.
To store oil products, the KPC has been attempting to obtain 45 storage tanks in Changamwe, Mombasa, which are owned by the KPRL and have a capacity of 484 million litres.
Speaking on the sidelines of a sitting by the committee in Mombasa, where MPs are examining the Kenya Pipeline Company’s audited accounts for 2020/21 and 2021/22, Mr Pkosing said once the KPRL is fully dissolved, the funds can be channelled to subsidise fuel prices since there is no justification for paying such an amount of money.
Regarding waivers for oil marketers, the Auditor-General questioned the criteria through which some companies were being given waivers, unlike the others without a policy.
The Parliament directed KPC to work with stakeholders to create regulations to back the waivers given to oil marketers to stop corruption or discrimination among them.
In the report, the Auditor-General also raised questions about how the KPC hired several workers, contrary to the number advertised.
During the year under review, the company hired 21 workers, not six as advertised.
KPC managing director Joe Sang had a difficult time explaining the queries referring the matter to the previous administration.
“I take up the case but most of the queries being raised happened in the previous administration but I will work to resolve the queries,” said Mr Sang.
The Auditor General’s report on Kenya Pipeline for the year to 30 June 2022 shows expenditures of Sh13,791,313,695 as direct costs including Sh2,530,110,019 for pipeline maintenance.
Included in the costs are lease payments to KPRL of Sh1,308,851,308 for use of a pipeline network, storage tanks and associated infrastructure.
Comparing total lease costs with lease income for the year revealed that Kenya Pipeline made income of Sh12,491,324, resulting in a net loss of Sh1,296,359,984.
