There is a serious standoff at Kenya Pipeline Corporation as Board Chairman John Ngumi who is known to be a key associate of the President and uses his name entrench his corrupt ways in the corporation attempts to fire the current Managing Director Joe Sang and others
According to sources within the parastatal, John Ngumi is determined to entrench his authority and force those he thinks are leaking his misdeeds to the media out and bring his people who are also seen to be able to protect those determined to loot the state corporation.
Kisumu oil jetty was constructed at an inflated rate of Ksh 1.8 billion against a Ksh 600 million estimation with John Ngumi being a major beneficiary of the contract through his conduits.
Coupled with that, KPC management has also been divided on move to pay oil marketers for the 11 million litres of fuel lost in instigated spillage.
Chairman John Ngumi called a meeting yesterday but it aborted as those board members who don’t support his style of leadership and action kept off, precipitating a quorum hitch. Some board members wanted marketers paid while others claimed that the fuel loss “scandal” was being engineered by a section of disgruntled board members.
KPC MD Joe Sang has reportedly demanded that he be allowed to complete his term, showed where his failures are as performance indicators show a contrary story or allow him to resign but pay him for the remaining period of his contract.
Corrupt cartels in the board and management seems to be holding the corporation at ransom as Kenyans, including the President, watch from the sidelines.
Members of the top management who are loyal to MD Joe Sang have indicated that the chairman is manufacturing scandals and linking the MD to them so as to remove him as political allegiances takes centre stage. Joe Sang is believed to be an ally of the Deputy President while John Ngumi is allied to the President and his associates.
Kenya Pipeline Corporation recently signed a single sourced deal with Israeli government, negotiated through government to government arrangement and geared towards deploying a meaningless camera network along the pipeline. Insiders claim that the deal was a way of key government functionaries siphoning funds out of the corporation, something which makes the management hold the President and his associates hostage as he personally participate in the deal signing during the visit of Israeli PM, Benjamin Netanyau.
Supremacy wars between MD Joe Sang and Chairman John Ngumi are not new as it has previously even spilt to the parliament where MPs were also bribed by both sides, forcing an inconclusive report.
Sang’s term ends in March 2019 though he is expected to ask for an extension.
The convened board meeting saw Petroleum PS Andrew Kamau personally present in the meeting in which he is usually represented by a Mr. Huson Andambi.
Also present and siding with John Ngumi are Safaricom queen of corruption Rita Okuthe and board member Winnie Mukami. Absent were Erick Korir, Jinaro Kibet and Felicity Birir, evidence of ethnic and political turf wars in the lucrative state corporation which is always riddled with corruption and dirty deals.
Board members Iltasayon Neepe and Wahome Gitonga have had their terms expire. Quorum requires the presence of at least 6 board members from the 9 member baord.
The nine member board requires at least 6 directors to form a quorum.
Oil marketers have demanded that they be compensated while KPC top management have claimed that the contract with oil marketers protects it from compensating for loses below 0.25 per cent of the total amount of fuel pumped through the pipeline.
Top management believes that the marketers are using John Ngumi to get the money through unorthodox means.
KP maintains that it only lost 0.15 per cent through “spillage” in the 2017/2018 financial year which is much lower than the compensation threshold set out in the agreement.
According to gain/loss provision, KPC had a loss of 0.17 per cent in 2014/2015, 0.2 per cent in 2015/2016 and 0.13 per cent in 2016/2017.
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According to KPC top management, claimed 2.3 Billion loss reported by Daily Nation led them to launch investigations which showed a completely different view, that yes there were a book balance and physical stock differential of approximately 23 Million litres which at Kshs 100.00 per litre including taxes would make the 2.3 Billion litres loss.
According to KPC, the makeup of the 23,000 cubic metres is as follows;
- Operational losses of 8,600 cubic metres for period Jan 2018 to Sept 2018, (980, 1123, 929, 840, 1,112, 992, 854, 823, & 948 cubic metres respectively),
- Line product theft of 5,690 Cubic Metres made up of Koru incident of Mar to June 2017 4,490 Cubic Metres and Ngong Forest April & May 2018 1,200 Cubic Metres and
- Line spillages of 5,956 Cubic Metres which occurred in 2017 and 2018 totalling seven incidences.
KPC believes that Chairman John Ngumi is planting stories through Daily Nation to push the MD and top managers out while protecting himself and key associates.
According to internal audit documents, Kenya Pipeline lost a total of 11,646 million litres; 5,956 million litres in spillage and 5,690 million litres in theft.
The loss was recorded between March 2017 and May 2018 in nine separate incidences which are also believed to be instigated by members of staff determined to loot the corporation.
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Five spillages blamed on corrosion by the management took place at Konza between 391 Km and 395 Km resulting in a loss of 3,805 million litres. The line is 40 years while it should have been operational for only 25 years before replacement, meaning that it is 15 years late for replacement.
“The line has currently been in use for 40 years, which is 15 years beyond its replacement date,”the document states.
Fuel within the pipeline travels at a massive speed of 13,000 litres per minute or 800,000 litres per hour when in live operation and pressures of up to 40 bars. Meaning that KPC risk losing millions of litres if a spillage is not detected and contained in time.
This means that in case of a burst, KPC risk loosing millions of fuel within no time.
In Koru (Kisumu County) the corporation detected that a syndicate of thieves connected to KPC staff illegally connected tanks to the line to siphon fuel which was detect to have resulted in 4,500 million litres of fuel theft.
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“The operation was difficult to detect because the trucks loaded at the fuel service station in the neighbourhood,” internal loss audit concluded.
Two suspects in the Koru fuel pilferage were arrested and charged last year even as the MD then blamed engineers for the theft.
In May 2018, KPC blamed the 1.2 million litres of fuel at Ngong Forest on an illegal connection with no single suspect arrested to date. Another loss of 1.15 million litres of fuel at KM40 and KM27 points was attributed to corrosion.
During the two year period, KPC pipes moved fuel in excess of 13billion litres on behalf of the Oil Marketers.
The frosty relationship between Ngumi and Sang played out in the open in Parliament two weeks ago.
But to avert bitter exchanges in public, the National Assembly Energy Committee chaired by Naivasha Town East MP David Gikaria was forced to conduct different sessions with Ngumi and Sang’s team.
John Ngumi is wanted in Tanzania as authorities began prosecuting those involved in the Sh600 million bribery scandal relating to a government bond. Efforts by Tanzania to have John Ngumi and a Mr Bashir Awale prosecuted have been blocked by individuals connected to State House, Nairobi.
Kenya Pipeline Company (KPC) chairman John Ngumi was in charge of the CFC Stanbic Bank’s East Africa investment arm, and Mr Bashir Awale served as Stanbic Tanzania CEO when the bond was floated in 2012.
The Tanzanian bond was handled by Stanbic Tanzania which was fined in 2015 for its role in the scandal.