Kenyans will not meet the costs arising from the loss of 11 million litres of fuel along the country’s pipelines reported last year, the energy regulator has said.
The Kenya Pipeline Corporation in practice passes the cost incurred from losses along the fuel pipeline to consumers at the pumps.
But the Energy and Petroleum Regulatory Authority yesterday said it only allows losses that are technical in nature, such as evaporation, to be passed to the consumer.
EPRA director general Pavel Oimeke said for the past two years, they have only allowed actual average losses of about 0.1 per cent against the international benchmark of 2.5 per cent.
Oimeke said EPRA monitors loss and gain levels which are factors considered in determining the pump prices declared every mid-month.
“EPRA has only allowed actual average losses of 0.1 per cent. By use of this, we saved the country Sh41 million this month. We compute what we allow to be passed to consumers based on the technical aspects,” he said.
Any loss that is above 2.5 per cent is borne by KPC, and is not even passed to the oil marketing companies using the pipeline system.
“Further, any unexplained losses, even if within the allowable limit, are not passed to the consumer. In this regard, the 11 million litres lost along the pipeline will not be passed to the consumer,” the EPRA boss assured.
He said a forensic audit is ongoing to unravel the circumstances under which the fuel was lost, a probe MPs said should be fast-tracked.
The National Assembly Committee on Energy, in a session chaired by Endebess MP Robert Pukose, called for a speedy conclusion of the investigations.
Present were MPs Elisha Odhiambo (Gem), Walter Owino (Awendo), Elsie Muhanda (Kakamega), Vincent Kawaya (Mwala), Julius Mawathe (Embakasi South), and Ken Chonga (Kilifi South).
The committee is conducting an inquiry into KPC operations with a view to recommending best practices to be employed by the company, some of which will be legislated.
“There must be timelines within which the forensic audit is to be carried out without interference and results reported. This long period should be a worry to EPRA,” Pukose said.
The lawmakers raised concerns that Uganda, Rwanda and neighbouring countries prefer to move their fuel through Tanzania yet Kenya has a pipeline.
It was revealed that it costs an additional USD 20 per cubic metre (Sh2,000) to move oil through the pipeline than to use trucks.
Owino, for his part, said EPRA would perform its duties better if it had an enforcement unit with officers seconded from the National Police Service.
Kawaya and Odhiambo called for action to reduce the cost of transporting fuel through the pipeline to give taxpayers value for money.
Oimeke said that construction flaws may have led to the oil spill on Line V at Kiboko in Makueni county.
He painted a picture of systemic flaws committed during Line V’s construction saying critical elements were ignored, ostensibly causing the loss of 409,000 litres of fuel.
About 350,000 litres was lost in the Thange oil spill, also in Makueni with other incidences related to oil spill reported at JKIA, Embakasi, and at the Kisumu Oil Jetty.
The Energy and Petroleum Regulatory Authority further said Line V is yet to be commissioned contrary to KPC’s position, eliciting concerns on the line’s safety.
The 2018 leak at Kiboko in Makueni county is a subject of investigations by the Directorate of Criminal Investigations.
The DCI is also investigating the leakage at Mlolongo – Machakos county, where some unscrupulous dealers created an outlet from which they siphoned fuel.
Oimeke told MPs that the line can only be considered commissioned once it is okayed by EPRA having assessed it is to the required specifications.
He revealed that the line was not fitted with a leak detection system, adding that it is yet to be connected to a fibre optic network as was specified.
The DG said preliminary investigations into the Kiboko oil spill showed that the leak was caused after a contractor caused an abrasion on the pipeline’s insulator, therefore, exposing the metallic part of the pipe.
“The pipeline has three-layer polypropylene cover. The layer was hit by something during construction exposing the metallic parts which ended up corroding,” Oimeke said.
(edited by O. Owino)
