Economy

MPs probe Amaco over Sh400 million Kenya Pipeline deal

hudson

Hudson Andambi, the acting KPC managing director. FILE PHOTO | NMG

The Kenya Pipeline Company (KPC) management was hard-pressed to explain how an insurance company associated with Deputy President William Ruto was offered a Sh400 million insurance without tendering.

The KPC management floated a multimillion-shillings insurance cover that was won by Sedgwick Kenya Insurance Brokers and Co-operatives Insurance Company (CIC) as an underwriter but one month after the contract was signed, Amaco was introduced as a second underwriter.

“There was no provision for coinsurance in the contract documents. CIC handled All Risk Insurance for KPC before another underwriter, Amaco came in through Sedgwick,” Hudson Andambi, the acting KPC managing director told the Senate committee on Energy chaired by Ephraim Maina.

“Amaco came in after the award of the contract to CIC but before the contract was signed. Sedgwick introduced Amaco.”

The committee resolved to invite Sedgwick, CIC and Amaco to shed light on the insurance dealings at KPC.

The KPC procured insurance services for the period July 1, 2016 to June 30, 2019 through open tender.

Kisumu oil jetty

The cover is for KPC’s large capital assets including the Kisumu oil jetty, tanks (identified as PS10) and Mombasa-Nairobi pipeline (Line V) against terrorism, sabotage, political violence, industrial risks and commercial and general liability.

However, three months after CIC Insurance signed the contract, Sedgwick the broker for KPC assets, approached KPC on September 9, 2016 “to confirm if it is in order” to co-insure 20 percent of the business “awarded to us” to Amaco.

On September 16, 2016, then KPC managing director Joe Sang granted a no objection to co-insure to Amaco, according to an audit of the contract, now in possession of the DCI.

Mr Andambi, who accompanied Petroleum Cabinet Secretary John Munyes, could not explain how Amaco was brought on board.

“Perhaps CIC talked to Sedgwick to say insurance risk is too heavy let me offload it to Amaco,” he said.