Page 4 - DMEA Week 29

DMEA Commentary DMEA
Kenyan fuel theft
scandal further
mires midstream
Another scandal has emerged in Kenya’s midstream, with accusations that pipeline installers colluded to set-up a fuel-siphoning scheme
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What:
Kenya has discovered advanced fuel theft from the Mombasa-Nairobi fuel pipeline, with major investigations now being carried out.
Why:
Siphoning has been done using a junction that appears to have been installed for that very purpose prior to the line being buried.
What next:
Senior executives at
KPC are already being questioned and the crisis is expected to lead to dismissals.
KeNyA’s long-su ering midstream sector has become embroiled in yet another scandal, with the government announcing this week that a junction had been added to a fuel pipeline com- missioned in August 2018 to allow the unde- tected the of petroleum products.
e 450-km pipeline was designed to carry fuel imports from Mombasa to Nairobi with a capacity of 1mn litres per hour, expand- ing capabilities and improving upon existing infrastructure.
Theft from pipelines is nothing new in sub-saharan Africa, but the manner in which this siphoning is taking place has raised eye- brows, with blame levelled locally at Lebanese contractor Zakhem International, which won the tender to construct and lay the conduit.
Kenyan sources have told Downstream MEA (DMEA) that the investigations carried out to date suggest that the apparatus through which fuel was being siphoned had been connected prior to the pipeline being buried.
A source close to the investigation who asked not to be named said: “If it turns out that the siphoning mechanism was installed prior to Zakhem burying the pipe, we could be talking about the the of millions of litres of fuel since August last year.”
He added that if this was indeed the case, “we would have to assume collusion between con- tractors and the engineers of Kenya Pipeline Co. (KPC)” on the installation of the junction, which was discovered in the Mlolongo area.
KPC chairman John Ngumi told local press: “It is very possible that the pipeline was compro- mised before it was laid,” adding that KPC sta were likely to have been involved, considering the skills required to install the junction. “Fuel is moved in a very precise manner that only our sta would know how and when to tap,” he said.
Ngumi added that members of staff were being investigated without providing any further details. He did, however, note that the investiga- tion would continue in Kiboko and Makueni,
with the KPC unsure if Mlilongo was the only location targeted.
Zakhem executive director Ibrahim Zakhem moved quickly to dispel the rumours and was quoted by Kenya’s e standard newspaper as saying that none of his employees had yet been questioned in relation to the siphoning and said that he was unaware of any involvement in the fuel the . He said: “Zakhem handed over the pipeline to KPC more than a year a er successful testing and commissioning in compliance with contract requirements [...] since the nal hand- over to KPC, its operations, safety, maintenance and security are the responsibility of KPC.”
The standard reported this week that the discovery of the the had been made when the authorities received a tip-o that trucks bear- ing the words “Clean Water” were being used to transport fuel from a plot that had been dis- guised as a construction site around 4km from the Mombasa road.
Chaos continues
Kenya’s fuel distribution network operator has faced several scandals in the last 12 months, with the Mombasa-Nairobi pipe having come under scrutiny previously.
e line was commissioned belatedly a er repeated delays and additional payments to Zakhem, which controversially won the engi- neering, procurement and construction (ePC) contract for Kes43bn ($420mn) in 2014.
However, late last year, the state auditor was considering the contractor’s demands for an additional Kes24.2bn ($236mn) to cover exten- sions of time and contract variations. In Novem- ber, it was reported to have reopened questions over the original tender process, which led to protests at the time by several of the defeated bidders over alleged irregularities.
such di culties have earned KPC a place on a list published in early November of 26 state rms slated for privatisation. e measure was billed primarily as a means to raise funds to cut the
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w w w . N E W S B A S E . c o m Week 29 24•July•2019