KPC seeks cash to correct Sh48 billion pipeline woes

KPC Managing Director Macharia Irungu. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • Such fuel losses are then factored into the monthly fuel pricing formula and loaded on consumers to compensate the oil marketers.
  • The extra budget will now add to the cost of setting up the line, which was built without the critical component, setting it up for pilferage by crooks working with insiders.

Kenya Pipeline Company has written to the National Treasury for budgetary approval to install a leak detection system on the recently constructed Sh48 billion Mombasa-Nairobi Pipeline.

In the move, the firm now seeks to rectify a costly oversight during construction of the 20-inch pipeline that has suffered two major breaches barely a year after it began operations.

KPC managing director Irungu Macharia said the firm has made another attempt to install the system, which it had failed to procure in 2018 due to an undisclosed reason despite having gotten a similar budget approval it is now seeking.

“A bidder moved to court to challenge the tender in 2016 and the court ruled in October 2017 that KPC should retender. KPC then sought a budget in FY2018/19 and it was approved, the procurement process did not materialise. KPC then sought budget approval in 2020/21 which is awaiting approval by the Treasury. Once approval of the budget is received from the Treasury, KPC will proceed with the procurement process,” Mr Macharia told Senators asking about the project progress.

EXTRA BUDGET

The extra budget will now add to the cost of setting up the line, which was built without the critical component, setting it up for pilferage by crooks working with insiders.

It is not possible to detect any siphoning or leakage from the line, a scenario that saw the loss of thousands of litres in Makueni when a spillage occurred and another unknown quantity at Mlolongo where crooks created an underground tunnel and diverted fuel to a makeshift depot, stealing products for months without being found out.

Mr Ngugi did not elaborate on why the company failed to procure the system after the budget was approved, a move his predecessor Hudson Andambi last year termed “unfortunate,”

“Leak detection was not included in the design stage, which is very unfortunate given that it was our second time constructing a pipeline. That was an unnecessary and costly omission,” Mr Andambi said.

Lebanese firm, Zakhem International while filling a Sh13.2 billion claim against KPC at the Milimani High Court for the delays in the construction of the pipeline, had blamed KPC officials who ignored advice to have the leak detection system installed on the line to avoid the losses.

OPERATIONAL DANGERS

“On several occasions, we warmed KPC of possible operations failure in the event KPC failed and/or neglected to install recommended material to maintain safe operation. We also warned KPC of operational dangers if the pipeline was not equipped with a leak detection system which KPC failed to install at the base appropriate line,” Zakhem director Adnan Annous said in an affidavit filed in court.

The new pipeline known as line five was built to replace the 16-inch old one called line 1 which was prone to undetected leakages, making a good case on why leak detection should have been top priority.

In 2015, the old line leaked in Makueni County contaminating a major water source and bleeding KPC some Sh300 million in clean-up and compensation with residents making huge demands for crops and livestock losses.

Such fuel losses are then factored into the monthly fuel pricing formula and loaded on consumers to compensate the oil marketers.

The June 2019 syphoning at Mlolongo set Kenya Pipeline Company at war with its security firm in a conflict that has ended in court after the contract for the security surveillance provider Hatari Security Guards Limited was terminated,

The security firm got court protection, saving its 115 guards from joblessness. The case is still in court but the arrests have largely centered on ‘small fish’ leaving questions on how outsiders used special pipes and technology to drill into the pipeline transporting fuel under extremely high pressure.

[email protected]