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Economy

Energy PS wants more time to explain why 8 firms owe State Sh754m

Joseph Njoroge
Energy Principal Secretary Joseph Njoroge. FILE PHOTO | NMG 

Energy Principal Secretary Joseph Njoroge was taken to task to explain why eight petroleum companies have failed to pay Sh754 million in the last three years.

Mr Njoroge failed to explain why the companies had not paid surface and training fees as per their production sharing contracts since the financial year 2015/16. He said the ministry wrote demand letters to the firms, most of them international, to pay the outstanding amounts.

He sought more time to produce letters for three firms after the Public Accounts Committee (PAC) directed that directors of the firms be presented to MPs on Thursday.

Mr Njoroge attached a list of five companies that the ministry wrote to on January 5, 2018, demanding payment of outstanding fees.

The companies are Lion Petroleum Corporation, A to Z Petroleum Products, Imara Energy, Rift Energy Kenya Limited and E and P Petroleum Limited.

“Reference is made to Production Sharing Contract (PSC) for Block L2 between Imara Energy and the Ministry of Energy. “Records available in the ministry show that you have outstanding payments amounting to $459,160 relating to surface and training fees.

“Your attention is drawn to Clause 34(2) of the Production Sharing Contract which states that any late payments shall attract interest at LIBOR plus 100 basis points,” Mr Njoroge said in a letter signed by Petroleum principal secretary Andrew Kamau.

Mr Njoroge appeared before PAC to respond to queries raised by Auditor General Edward Ouko.

Mr Ouko said eight oil companies did not remit annual training contributions and surface fees totalling $7,445,052 (Sh754,147,743) contrary to their individual production sharing contracts.

PAC chairman Opiyo Wandayi directed Mr Njoroge to go back with Mr Kamau on Thursday to answer the MPs’ questions.

“How seriously does the ministry take remarks by the auditor? The audit raised this issue in 2015 but the ministry send demand letters to the companies in January 2018.

“These letters are purported to have been sent to the companies but there is no response. The companies owe the government Sh754 million and you send reminders stating that please pay. Are you doing justice to the government?” Molo MP Kuria Kimani asked.

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