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Manufacturers of edible oils in Kenya Wednesday, May 29 told the National Assembly Committee on Trade, industry and cooperatives that they will have no choice but to pass the cost to consumers in the event the Bill is passed in its current form.
Kenyan Taxpayers lost at least Sh6.6 billion in the controversial edible oils importation deal with several anomalies flagged in the process, a Senate committee heard on Tuesday.
The latest development came as it emerged that Kenya National Trading Corporation (KNTC) sold some uncleared consignment, nearing expiry date, to a local firm for re-shipping yet the batch is still in the country.
The damning revelations emerged during a meeting of the Senate Committee on Trade conducting an inquiry into the controversial Sh16.5 billion edible oils scandal.
Appearing before the committee on Tuesday, KNTC General Manager for Finance Purity Kimanthi said the Sh6.6 billion was lost due to fluctuation in exchange rates, clearance and warehousing costs.
Ms Kimathi told the committee chaired by Kajiado Senator Seki Lenku that the corporation has sold at least 1.67 million jerricans of the oil as at September 17, 2024, generating only Sh5.9 billion.
However, 10,651 jerricans were damaged during logistics and stripping and the corporation is following up insurance claims.
Further, KNTC said they still have Sh313.1 million in outstanding payables in terms of warehouse rent, storage and agency fees.
“Yes, we have lost the amount through fluctuations in dollar to Kenya shillings exchange rates, warehousing and clearance fees,” said Ms Kimathi.
She also admitted that some consignments were sold at Sh3,028 per jerrican instead of Sh3,700, resulting in a loss of Sh540 million.
“So you are admitting there is such a loss due to the factors you have mentioned. Who has benefited from this?” posed Senator Lenku.
Ms Mutua was reacting to concerns raised by Marsabit Senator Mohamed Chute that more than Sh6 billion of taxpayers’ money had been lost through overpayment to suppliers, fluctuations in exchange rates and failure by some of the suppliers to refund the overpaid amounts.
Mr Chute raised the alarm on why there was price variation from the original $23 to $30 for each 20-litre jerrican leading to overpayment of at least Sh2.5 billion.
He told the committee that the price varied fraudulently because the letter of credit was opened at $23 but KNTC ended up paying $30.
“At the time of purchasing the cooking oil, the dollar exchanged at Sh162 and at the time of selling the consignment, the rate had fallen to Sh133, losing at least Sh1 billion in the process. Who will bear this loss?” posed Mr Chute.
“Can you tell this committee when and how you are going to recover this Sh6 billion not in your accounts,” he added.
Slap in the face
Nominated Senator Esther Okenyuri added: “This is a slap in the face of hustlers who were waiting for these items to cushion them against the rising cost of living. This was a total mess that should not be taken lightly.”
The importation of the cooking oil was approved by the Cabinet in 2022 to create a strategic reserve to address the rise in the cost of living by creating a price stabiliser for essential household food items.
General Manager, Strategy Lucy Anangwe, who was Finance and Accounts manager at the time, removed himself from the accusation, saying she was not part of the team and only came to learn of the variations during the probe by the Directorate of Criminal Investigations (DCI).
Nonetheless, KNTC acting Managing Director Peter Njoroge admitted to the variations but blamed it on his predecessor, Ms Pamela Mutua.
“It is true the prices were changed but the person who did that was the former boss,” Mr Njoroge told the committee.
“The amounts were paid but erroneous as it may have been, we take responsibility for it,” said Ms Kimathi.
According to documents submitted before the committee, price variation was cited by KNTC in the credit note communication between the former managing director, Ms Mutua, and the suppliers, where the suppliers were surcharged and ordered to refund the money.
The corporation engaged all suppliers of imported commodities where suppliers agreed to issue credit notes to KNTC equivalent to $7 per jerrican of edible oil.
Mutli-Commerce is yet to honour credit note amounting to $6.8 million and Charma Holdings $3.7 million.
“What measures are you going to take into account to ensure the two firms pay almost Sh2.5 billion they owe you?” asked Mr Chute.
However, Mr Njoroge said they have been engaging the suppliers and Multi-Commerce has been responsive.
“Should the firms not pay, then we will seek the support from offices higher than us to put pressure on them to refund. In the event that also fails, then we can explore legal action as a last resort,” he said.
KNTC Board Chairperson Hussein Dabasso admitted that procurement in dollars was unfortunate and should not have happened because the procuring entities were local firms.
“Progressively, the Board has guided that in future, procurements should be done in Kenya shillings,” said Mr Dabasso.
Senator Chute hard-pressed Mr Njoroge to explain why they sold 797,574 20-litre jerricans of uncleared consignment to a local company at a loss.
“We want to know who the consignment was sold to, at what price and where is the money?” asked the senator.
Mr Njoroge told the committee that the consignment was sold to EnviroPro Kenya Limited for onward shipment outside the country.
According to a search, the firm has three directors and shareholders, including Nicholas Mathenge (the majority shareholder with 900 ordinary shares), Tevin King’oo Kyalo (100 shares) and Abdikadir Ali Ibrahim.
“We sold the consignment because the taxes and other costs were weighing heavy on us,” said Mr Njoroge.
Ms Kimathi said the consignment was sold at Sh3,028 per jerrican as opposed to Sh3,700 because they had not paid tax on the consignment.
