Raila and Inchung'wah

Azimio la Umoja One Kenya leader Raila Odinga (right) and National Assembly Majority Leader Kimani Ichung’wah.

| Nation Media Group

Raila Odinga and Kimani Ichung’wah in war of words over fuel deal

Opposition leader Raila Odinga wants President William Ruto’s controversial fuel purchase deal with Gulf petroleum conglomerates cancelled, followed by a probe by investigating agencies and the surcharging of top government officials he said had built a backdoor to benefit from the deal.

Terming the deal a “grand scam”, Mr Odinga asked the Ethics and Anti-Corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to open a probe to unearth the faces behind the mysterious oil deal and also to establish the tax compliance of Gulf Energy, Galana Oil Kenya Ltd and Oryx Energies Kenya Ltd in the deal.

Addressing a press conference in Nairobi, the former premier asked President Ruto to sack senior government officials behind the deal and have them surcharged.

He claimed the deal was meant to protect the three companies from paying 30 per cent corporate tax, alleging that the deal was not a government-to-government, but one with state-owned petroleum companies in the Middle East.

“The Kenya Revenue Authority (KRA) must come clean on the tax compliance status of the three oil companies and explain why they are being enabled to evade billions in taxes while ordinary Kenyans are being harassed for taxes,” said Mr Odinga.

Raila asks Ruto to restore fuel taxes to 8pc from 16pc

But National Assembly Majority Leader Kimani Ichung’wah, in a quick rejoinder, termed Mr Odinga’s ‘dossier’ as nothing but hot air and political propaganda.

Mr Ichung’wah said the three companies are not the agents of the Kenyan government.

He said the companies were doing logistics on behalf of Aramco and ADNOC – the two state corporations in Saudi and United Arab Emirates.

“It is not the business of the Kenya government on who those corporations appoint as their Kenyan partners. Even under the Open Tender system, the three companies accounted for 80 per cent of all oil imports in the country justifying their pick as the local logistics partners,” said Mr Ichung’wah.

He dared Mr Odinga to adduce any evidence that shows that the three companies are not paying taxes.

But Mr Odinga yesterday insisted that the characterisation of oil deal as government-to-government was meant to shield the three Kenyan firms from paying corporate tax. He said the shilling has continued to weaken against the dollar while the price of fuel has also continued to skyrocket.

“The deal was a scam for which we now demand full disclosure and full accountability. It is corrupt and rotten to the core. It is state capture by Ruto and company and a conspiracy against the country,” Mr Odinga claimed.

“In other words, the deal has not addressed any of the problems Ruto said it would. When Ruto initiated this deal, the US-dollar to Kenya-shilling exchange rate was Sh132. Today, six months later, it is Sh159 to the dollar. The cost of fuel shot up significantly after the deal,” he added.

President Ruto had in April said the deal signed in March would help to stabilise the shilling.

“From this month of April, all our fuel marketers and other players in the space will be able to buy fuel products in Kenya shillings. This will remove pressure on the dollar,” he had said.

He went on: “In fact, in the next one month or so, we will see the exchange coming down in a very phenomenal way. .. in my estimation, in the next couple of months, the exchange rate will come down to below Sh120, maybe Sh115, you never know.”

But the shilling has continued to weaken further against the dollar.

It is now trading at Sh151.94 against the dollar. Since January, the shilling has shed 23.2 per cent against the dollar. The fuel prices have also gone past the Sh200 mark.

Mr Odinga demanded that the government immediately cancel the contract and revert to the Open Tender System which he said ensured guaranteed supply of petroleum products.

Epra fuel prices review

Kenya announced the credit-based fuel sourcing deal with three Gulf oil firms on March 13, 2023.

Photo credit: Nation Media Group

“It (the open tender system) assigned responsibility to various players as opposed to the so called G-to-G that is making Kenyans depend on one inefficient and corrupt player,” he said.

While claiming that the deal is shrouded in deep secrecy, Mr Odinga said that only the Master Framework Agreement with petroleum trading entities and the Open Tender System modified agreement with marketers have been made public.

“The Supplier Purchase Agreement between the Middle East Oil firms and their hand-picked distributors in Kenya has never been seen. We challenge Ruto to publish this document. Nobody knows how Gulf Energy, Galana Oil Kenya Ltd and Oryx Energies Kenya Limited got nominated to handle local logistics,” he said.

He challenged the Ministry of Energy and Petroleum to make public the Supplier Purchase Agreement it signed with the oil companies.

“The government must make public the so-called MoU between Kenya and Saudi Arabia and the United Arab Emirates and the Ministry of Energy and Petroleum must make public the deal it signed with the oil companies,” stated the former Prime Minister.

To cushion consumers from the high cost of fuel, Mr Odinga demanded that government reduce the value added tax (VAT) on petroleum products to eight per cent from the current 16 per cent.

But Mr Ichung’wah yesterday said it was dishonest of Mr Odinga to seek to score cheap political points on the back of a problem he and former President Uhuru Kenyatta created.

“It is laughable and nearly despicable to hear Mr Odinga talk about corruption and state capture. Mr Odinga was the single guarantor and facilitator of state capture under the Handshake regime,” said the Kikuyu MP.

He said that the global oil prices have been spiking on account of emerging wars in the oil-producing regions in the Middle East and Europe. In his statement, he said the decline in the ‘global oil prices are beginning to steady and that has been reflected in the recent EPRA pump price revisions.’

He dismissed the assertion that the landing cost of oil products in the neighbouring Tanzania and Uganda is cheaper than in Kenya.

He said the shilling depreciating value is as a result of so many factors, some of which he blamed on Mr Odinga and Mr Kenyatta.

“Mr Odinga knows that under the handshake regime, they spent $2 billion of our foreign exchange reserve to artificially prop up the Kenyan shilling as was recently disclosed by Central Bank Governor Dr Kamau Thugge,” he said.