- Auditor General Nancy Gathungu said the company recorded a loss after taxation totalling Sh283,113,734 in the year under review.
- She said the company is depended on income from assets leased to Kenya Pipeline Company Limited and support by its creditors.
Kenya Petroleum Refineries Limited is technically insolvent and has closed its core business of oil refining, a report by Auditor General Nancy Gathungu says.
Gathungu, in her report for the year ended June 30, 2022, said the corporation’s liabilities amounted to Sh4.9 billion, exceeding assets totalling Sh2.1 billion during the period under review.
“The statement of profit or loss and other comprehensive income indicates that the company recorded a loss after taxation totalling Sh283,113,734 in the year under review, being the sixth consecutive year of such losses,” she said.
Gathungu said the corporation’s continued existence as a going concern is dependent upon the continued receipt of income from assets leased to Kenya Pipeline Company Limited and support by its creditors and the National Government.
“The Directors have not made any disclosure on the uncertainty or the measures, if any, they may have initiated to stem the losses as required by the International Accounting Standards (IAS 1), Presentation of Financial Statements,” the report said.
Gathungu noted that the inventory balance includes engineering stores totalling Sh806 million, which were acquired before refining operations were shut down on September 4, 2013.
“However, despite the items being rendered unusable, they have continually been carried in the books of the company at cost instead of their salvage values, if any. Management indicated that action on the matter was awaiting the National Government’s decision on the future of the company,” she said.
She added that a review of inventory records provided for audit revealed that the company did not have a comprehensive inventory management system that classifies items according to date acquired, date utilised and those that have been rendered obsolete.
“As a result, the period in which specific inventory items have been held and whether any of the items have been rendered obsolete could not be ascertained,” she said.
Gathugu said further that inventory valued at Sh2,198,668 had expired as at June 30, 2022 therefore, rendering them obsolete.