Taxpayers could have lost in excess of Sh5.1 billion at the graft-ridden Kenya Pipeline Company in the financial year ending June 30, last year.
This was revealed in Auditor General Edward Ouko’s report exposing the rot at the firm.
The queries arise from an undeclared debt owed to an oil marketing company; incomplete electronic budget system and pending contract claims among other accounting issues.
KPC is also on the spot over unaccounted payments for hydrant pit valves, environmental clean-up, motor vehicle accessories, overtime, and subsistence allowances to staff.
The state oil corporation was in the news after its directors were charged with the loss of Sh1.9 billion in the construction of Kisumu Oil Jetty.
Managing director Joe Sang, Gloria Khafafa (company secretary), Vincent Cheruiyot (GM Supply Chain Management), Billy Aseka (GM Infrastructure) and Nicholas Gitobu (Procurement manager) denied abuse of office charges arising from the jetty project last year.
Even before the dust settled, KPC is beset with questions regarding the unutilised jetty whose assets have depreciated by Sh11 million.
The facility is idle owing to the lack of infrastructure for receipt and storage of the products in Uganda.
“Although management has indicated there is progress in construction of one of the two planned similar jetties on the Ugandan side, it is not certain when the same will be complete and operationalised,” the Ouko report reads.
The report, tabled in Parliament last Thursday, says the Sh1.9 billion owed to the oil marketing company is doubtful.
The money, which is subject of arbitration by the courts, was not declared in the company’s 2017-18 financial statements.
An advance payment of Sh24 million for an electronic budgeting system which was not supplied has equally been flagged.
The system was procured in 2015 and over Sh4 million paid to the vendor for software licence, maintenance, and user training fees.
KPC has since terminated the contract with the vendor but is yet to recover the funds. The bond, which covered the advance payment expired in November 2015.
“From the foregoing, value for money and propriety of Sh30 million incurred on the budgeting system cannot be confirmed,” Ouko said.
The auditor has further questioned the payment of Sh1.7 billion claimed by a contractor working on the Mombasa-Nairobi oil pipeline. The pay, which followed a change of project design and omission of works, was contested by the project’s engineer. A review of five Extension of Time (EoT) claims also revealed the same was overstated by Sh14 billion.
The question on the KPC’s direct procurement of hydrant pit valves at Sh665 million remains unresolved two years since the same was flagged by the auditor.
The firm claimed that a US-based vendor was awarded the contract on account of being the manufacturer of the equipment.
“No evidence is available to validate the assertions. I am not able to confirm whether the company obtained value for money for the Sh665 million paid to the vendor,” Ouko says in the dossier.
The auditor also flagged payment of Sh24 million in excess of Sh147 million awarded to a firm to carry out an environmental clean-up along the KPC pipeline. “The contractor invoiced the company after the full contract sum was paid in March 2017.”
Ouko has further cast doubt on the company’s purchase of motor-vehicle accessories namely chevrons, car mats, stripes, reflectors, life savers, and key tags at Sh9,096,935.
The items were bought at prices 350 per cent higher. Of concern is that only a small number of the items were issued and none could be found at the KPC stores.