Mystery of Sh17bn diesel in ship held at Mombasa Port for a whole month

An oil tanker.

An oil tanker. Two companies are engaged in a court fight over who should claim a Sh17bn diesel consignment after offloading at the Mombasa Port.

Photo credit: File

Two importers are tussling over the ownership of a Sh17 billion diesel consignment, a dispute that has blocked a ship from offloading the fuel at the Mombasa Port for a month.

Due to the row, the ship, Haigui, has been on the Indian Ocean since October 11 when it docked with 100,000 metric tonnes of diesel.

The tussle is playing out at the High Court in Mombasa. The two importers involved are Ann’s Import and Export Enterprises Ltd and Galana Energies Ltd.

The case was filed by Ann’s Import and Export Enterprises. As a result, a warrant of arrest has since been issued against the ship, restraining the Kenya Ports Authority (KPA) and the Kenya Pipeline Company (KPC) from offloading the diesel until the case is heard and determined.

It gets murkier with a claim made yesterday that the director of Ann’s Import and Export Enterprises, Ms Anna Njeri Njoroge, went missing after recording a statement with the Directorate of Criminal Investigations on Thursday.

According to her lawyer Cliff Ombeta, she cannot be reached on the phone.

“Ms Njoroge went to DCI headquarters in the morning of Thursday and after recording a statement, nobody has seen her. The officers who spoke to us last said she had been taken by National Intelligence Service officers. Since when did the NIS arrest anybody?” asked Mr Ombeta at a press briefing in Mombasa yesterday.

The importation standoff has brought to fore the government-to-government fuel deal that Kenya struck with three Gulf-based companies, amid questions as to who is behind the lucrative consignment that one of the parties claims is short-circuiting this agreement.

In March, President Ruto’s government sealed a deal with Saudi Aramco Trading Fujairah (Aramco), Abu Dhabi National Oil Company (Adnoc) and Emirates National Oil Company (Enoc). This marked a switch from an open tender system in which local companies bid to import oil every month.

In September, Kenya extended the oil supply deal with the three companies.

Kenyan authorities have explained that the new fuel import system was designed to manage the demand for dollars and ultimately help curb runaway fuel prices — twin problems that, however, remain unresolved.

Court papers obtained by the Sunday Nation lift the lid on behind-the-scenes trade wars surrounding the fuel import deal.

On Thursday, Justice Kizito Magare certified the case urgent and directed KPA and KPC to file their documents within 48 hours and at the same time issued the bar orders.

Crude Oil Tanker 'Nan Lin Wan' discharges petroleum products at the KOT 2 in Mombasa

Crude Oil Tanker 'Nan Lin Wan' discharges petroleum products at the KOT 2 in Mombasa on May 11, 2023. 

Photo credit: File | Nation Media Group

“A warrant of arrest do issue against the Motor Vessel Haigui laden with cargo diesel EN590. An order is hereby issued restraining discharge and offloading of cargo, being diesel EN590,” said the judge.

Ann’s Import and Export Enterprises, through Ms Njoroge, sued after it became apparent that the cargo could be released to Galana Energies , which alleges it is licenced to handle importation and supply of petroleum products within the country.

“(Ann’s Import and Export Enterprises) is further apprehensive that KPA and/or KPC may proceed to illegally and without any justification lay claim of the cargo therein being disel EN590 whose value amounts to Kenya Sh17 billion,” the accuser company said in court papers.

Court documents indicate that the vessel originated from the port of Jeddah in Saudi Arabia.

It is alleged in the pleadings that the KPA had recalled the vessel to the Kipevu Port for offloading the cargo and discharging the same to Galana Energies.

“I am apprehensive of other unscrupulous claims, the KPA is likely to offload and discharge the vessel in favour of Galana Energies or any other third parties who may be laying similar baseless claims apart from the claimant herein who is the consignee and owner of the said cargo,” Ms Njoroge, the director, said through lawyers David Chumo and Cliff Ombeta.

Ms Njoroge told the court that the cargo was procured through various financial facilities and insurers, hence she will stand exposed to huge financial losses as well as legal claims from its insurers and financiers should it be released to Galana Energies Ltd.

“Unless the instant application is heard expeditiously the orders herein granted, the said cargo will be offloaded and discharged to KPA or any such party and payment made to Galana Energies Ltd or any such third party who is not the consignee. My claim herein shall be rendered nugatory occasioning great financial loss,” she said.

Ms Njoroge says she is a businesswoman who has invested vastly in the petroleum industry and that she registered her company in 2009 as the sole director.

She describes the company as an international company trading in commodities, handicrafts, curios, gift items, petroleum, minerals and general merchandise. It has offices in Kenya and Dubai.

In its fightback, Galana Energies insists that it is duly licensed by the Energy Petroleum and Regulation Authority (Epra) to import petroleum products and to be a supplier of the products and services within the country.

Galana Energies CEO Antony Munyasya says that the consignment is part of the supply required to meet the country’s fuel requirements and has been allocated to various oil marketing companies.

The company also indicates in court documents that it has a transport and storage agreement with the KPC for the storage of fuel consignments arriving in the country.

“No person can import petroleum into the country without a licence or transport and storage agreement (TSA),” Mr Munyasya pleads.

Mr Munyasya notes that the company wrote to Epra on November 9 enquiring on whether Ann’s Import and Export Enterprises has a licence duly issued by Epra and also a transport storage agreement.

“The response by Epra confirmed that the claimant has never been licensed to import petroleum products into Kenya and did not have a TSA. The claimant has concealed material facts. I also verily believe that the claimant has also made a false statement in its pleadings before the court,” says Mr Munyasya.

The government had, in notice number 3 of 2023, introduced the framework for importation of refined petroleum products for sale in Kenya and transit markets through a government-to-government arrangement.

“Under the Petroleum Regulations, 2023, the importation of petroleum is centrally coordinated by the ministry responsible for petroleum,” he said.

According to Mr Munyasya, the government appointed three international oil companies, pursuant to the applicable regulations, to supply oil to Kenya.

These are Enoc, Adnoc and Aramco.

“The international oil companies under the government-to-government arraignment have nominated Gulf Energy Ltd, Galana Energies Ltd and Oryx Energies Kenya Ltd as their counterparties to import petroleum products into the country on their behalf. Ann’s Import and Export Enterprises Ltd has not been nominated to import any petroleum products into the country,” Mr Munyasya argues.

He further claims that Aramco nominated Galana as its counterparty to handle the importation of petroleum products.

The company further notes that Aramco engaged it to supply Automotive Gas Oil (AGO) 50PPM (with 50 parts per million of sulphur).

“To finance this consignment, Galana entered into a tripartite agreement involving the KPC Ltd and KCB bank, which issued a letter of credit. The consignment is collateral (security) for the letter of credit,” pleads Mr Munyasya.

While Ann Import and Export Enterprises says the vessel sailed from the Jeddah Port, Galana says the same sailed from the Port of Yanbu on September 28 then went to the Jeddah anchorage the following day for cargo doping before arriving at Mombasa port on October 11.

“It is not possible for a ship to have loaded at the port of Jeddah in Saudi Arabia to have arrived at the Port of Mombasa two days later,” Galana Energies argues.

The case will be heard on November 14.