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Exclusive: The Ksh1.5 Billion Kipevu Oil Jetty Scandal That Almost Happened

/Courtesy

Another scandal involving Kenya Pipeline Company (KPC) and Southern Engineering (SECO) almost went through, before the Directorate of Criminal Investigations (DCI) swang into action and arrested KPC top officials.

The well calculated graft scandal, would have cost taxpayers more than Ksh1.5 billion in the upgrade of Kipevu Oil Jetty flow enhancement.

Documents in possession of Kahawa Tungu’s investigative desk reveal that the tender for the project was first floated early this year.

Upon evaluation only SECO went through Technical Evaluation and therefore qualified for financial opening. Their financial bid was Ksh2.8 billion. This necessitated a re-tender and again only SECO went through to financial opening. Their financial bid was Ksh1.5 billion.

Before the award was done one of the bidders (Hydrolo Pipeline Company) petitioned Public Procurement Regulatory Authority (PPRA) formerly Public Procurement Oversight Authority (PPOA) for a review of the technical evaluation since he felt that his technical bid was not evaluated fairly.

PPRA summoned both parties to appear before them and defend their positions. PPRA ruled that KPC did not carry out the evaluation of the petitioner in accordance to the procurement act and the criteria set out in the tender document. It therefore ordered for a re-evaluation of the bid by Hydrolo and report back within 14 days.

Read: PS Andrew Kamau, Joseph Njoroge And KPC Chairman John Ngumi Axis Of Corruption At KPC

KPC ignored this order by PPRA and after expiry of the order given, the general manager Supply Chain (Vincent Cheruiyot) wrote an opinion to the managing director (Joe Sang) recommending the cancellation of the tender siting budgetary constraints as the reason.

It was later discovered that KPC overlooked Hydrolo’s qualifications in order to award the tender to SECO, the company adversely mentioned in the Kisumu Oil Jetty Scandal. This was an easy target in view of the expected kickbacks, as revealed in earlier investigations of this desk.

The Public Procurement Administrative Review Board, in its review says, “The Board observes that contrary to the Procuring Entity’s (KPC) letter of notification dated 3rd October 2018, notifying the applicant (Hydrolo) of its unsuccessful bid, the applicant provided evidence of past experience not only in water works projects but also in erection and fabrication of storage tanks and bottom plates, cleaning, repairing and painting of oil tanks, refining (through column distillation) of petroleum products, storage and blending of fuel oil, gas oil, bitumen, petrochemical and pyrolysis oil, import, export, storage and distribution of petroleum products and petrochemical products, pipeline works, marine loading arm installation and corrosive works.”

In the category, Hydrolo was awarded a zero out of five, despite having sufficient experience required for the work.

“The Board finds the aforementioned proof of past experience in construction works in oil and petrochemical industry demonstrates that the Applicant (Hydrolo) would successfully execute the project under the subject tender in the area of new installation, rehabilitation and system redesign and modifications,” adds the board.

On the letter referred to by the board, Maureen Mwenje on behalf of the managing director Joe Sang listed lack of past experience as the first reason they disqualified Hydrolo.

This is the second scandal of the kind to hit KPC after the Kisumu Oil Jetty scandal which was engineered by chairman John Ngumi.

But of interest is the wanton waste and fraud pushed through by the KPC Chairman John Ngumi.

According to insiders, Kenya Pipeline bought all materials meant to be used to construct the jetty in 2001, just two years before the departure of President Daniel Arap Moi. 50% of the materials were stored at the KPC yard in Industrial Area, Nairobi, while the remaining were kept at the facility in Kisumu.

Read: The Ksh30 Billion KPC Loan From Israel That Is Keeping Fuel Prices High

In 2016, John Ngumi started demanding “kitu cha kuuma” (something to chew) from key engineers in the state company, saying that he must also find something he can benefit from. Despite enjoying all manner of perks from the company including Ksh 2million salary (remember he is not an executive chairman) and various other benefits, he continually demanded other deals and forced through the Kisumu Jetty deal.

Before announcing the Kisumu Jetty tender winner, KPC disposed the previously bought materials which were in perfect state and meant to construct the jetty. Now insiders believe that the materials were which were sold as scrap metals were sold to the same company, South Engineering Company (SECO) which later used the same to construct the jetty and charge KPC exorbitantly. KPC paid a whopping Ksh1.8 billion for the Kisumu Oil Jetty which might never work.

Analysts believe that with the materials which were available, KPC would not have spent more than Ksh250 million if it constructed the jetty using own engineers. KPC would have spent a maximum of Ksh600 million to see the completion of the jetty if it were to buy the materials afresh.

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email francis@kahawatungu.com

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