KPC board, management split on Kisumu jetty cost

Kenya Pipeline Company (KPC) board and management have differed over the actual cost of construction of the Kisumu Oil Jetty which cost taxpayers Sh1.9 billion.

While KPC chairman John Ngumi insisted that the board approved a budget of Sh1.487 billion for the construction of the jetty, the management said the project cost 1.9 billion to complete.

The building of the jetty and the escalation of project cost has seen top former KPC managers, including former managing director Joe Sang charged in court over the procurement.

“The board approved a budget of Sh1.478 billion and this is what went to Cabinet Secretary in the Ministry of Energy and Petroleum for onward transmission to the Cabinet Secretary for National Treasury.

“I will be surprised if the management passed a budget different from what was approved by the board,” Mr Ngumi told the National Assembly’s committee on Energy that is probing the procurement of the jetty.

Mr Ngumi’s position was backed by the Treasury which said Sh1.487 billion was approved on September 21, 2016 for the project.

“I can confirm that the National Treasury approved a supplementary budget of Sh1.487 billion for financial year 2016/17,” Erick Korir, the Director of Procurement in the National Treasur.y said.

But Pius Mwendwa, the acting KPC Finance Manager told the committee chaired by Nakuru Town East MP David Gikaria that the Treasury approved Sh1.487 billion in the 2015/16 supplementary budget and a further Sh500 million in the 2016/17 budget, bringing the total cost to Sh1.9 billion.

“The Kisumu Oil Jetty was an urgent project that emanated from Northern corridor inter-ministerial committee. This was a two year project and was attached with budget costs. The consultancy, construction, travel costs and among others was Sh1.638 billion,” he said in the company of acting managing director Hudson Andambi.

He said the first year of implementation budget was Sh1.487 billion and the balance was factored in the subsequent financial year.

“The budget for supplementary presented to the board was Sh1.487 billion while in 2017/18, the balance of Sh500 million was factored and approved in the normal budget cycle. The Sh500 million was presented to the board and was approved,” Mr Mwendwa argued.

Supplementary budget

Mr Ngumi tabled correspondence between Energy and Petroleum CS and CS Treasury which states that the Sh1.487 billion in the supplementary budget is a consequence of a Cabinet Memo sanctioning the construction of the jetty.

“The sponsors of these projects are Heads of State of the northern corridor project that comprises Kenya, Rwanda, Uganda and South Sudan. They selected KPC as the implementing agency,” Mr Ngumi said.

He distanced himself from accusations that he was the architect behind the construction of the oil jetty and that he had conflict of interest in the same.

“I completely and categorically reject a baseless allegation that I am a sponsor of the Kisumu oil jetty project which is a project sanctioned by Head of States of Kenya and its neighbours. I reject the allegation that has been made,” he said.

Mr Ngumi said the board does not initiate contracts but oversights, directs or advise management. “This project was presented to board finance committee by management as government priority project. The board approved this project on August 10, 2016 and had nothing to do with procurement after approval,” Mr Ngumi said.