I blogged on the fishiness at the KPC... yep!
I may not be the #1 fan of Oil Marketers but I prefer competition (free markets) rather than corrupt & inefficient government bureaucrats running the show...
KPC has been feeding the gullible media, some (moronic) Kenyans & Oil Marketers with false information about the levels of fuel stocks in Kenya Oil Storage Facilities (KOSF) as well quantities at their depots & in the pipeline...
Kenyans/government/idiots blamed Oil Marketers for the recent fuel shortages... well, it turns out there was a real shortage because the so-called fuel is missing!!! Yes, KPC can't account for 56,000,000 litres... (no 56 or 560 or 5,600 or 56,000)... worth Kes 7,000,000,000 (Seven Billion)... Kaput... Abracadabra...
No wonder there was a fuel shortage... KPC says it was there... but it is not... so where is it now?
Was it ever there?
I may not be the #1 fan of Oil Marketers but I prefer competition (free markets) rather than corrupt & inefficient government bureaucrats running the show...
KPC has been feeding the gullible media, some (moronic) Kenyans & Oil Marketers with false information about the levels of fuel stocks in Kenya Oil Storage Facilities (KOSF) as well quantities at their depots & in the pipeline...
Kenyans/government/idiots blamed Oil Marketers for the recent fuel shortages... well, it turns out there was a real shortage because the so-called fuel is missing!!! Yes, KPC can't account for 56,000,000 litres... (no 56 or 560 or 5,600 or 56,000)... worth Kes 7,000,000,000 (Seven Billion)... Kaput... Abracadabra...
No wonder there was a fuel shortage... KPC says it was there... but it is not... so where is it now?
Was it ever there?
(BTW, the KPC owns the KOSF storage tanks & since that is the only option for Oil Marketers, Banks/Financiers, etc... so there was no choice but use KPC)
Engen (a private Oil Marketer) complained that Triton (politically connected & always favoured by KPC) has not delivered Engen's share of the fuel stocks Engen already paid for... My sources tell me most Oil Marketers are in the same boat... since they had to buy the (non-existent) stocks from Triton due to OTS rules...
So...no wonder there was a shortage!!! And the government blamed/claimed Oil Marketers were 'hoarding'... WTF??? How do you hoard what you don't have!!! (Please remember these are government employees who like hoarding my taxes in their pockets)
Now there are silly proposals to:
- Introduce price controls (bad, bad idea)
- Give NOCK (another inefficient 100% gov't owned firm) the right/guarantee to import 30% of Kenya's fuel requirements rather than compete vs the rest of the importers. What if NOCK negotiates prices that are say a little over market... the difference going to some politician's bank account in Cayman?
Do I smell scandal & corruption if the proposal were to pass? YES.
Engen (a private Oil Marketer) complained that Triton (politically connected & always favoured by KPC) has not delivered Engen's share of the fuel stocks Engen already paid for... My sources tell me most Oil Marketers are in the same boat... since they had to buy the (non-existent) stocks from Triton due to OTS rules...
So...no wonder there was a shortage!!! And the government blamed/claimed Oil Marketers were 'hoarding'... WTF??? How do you hoard what you don't have!!! (Please remember these are government employees who like hoarding my taxes in their pockets)
Now there are silly proposals to:
- Introduce price controls (bad, bad idea)
- Give NOCK (another inefficient 100% gov't owned firm) the right/guarantee to import 30% of Kenya's fuel requirements rather than compete vs the rest of the importers. What if NOCK negotiates prices that are say a little over market... the difference going to some politician's bank account in Cayman?
Do I smell scandal & corruption if the proposal were to pass? YES.
Additional Links:
Why corruption thrives at KPC & benefits accruing to political appointees
KPC lied about Fuel Stocks (Missing/Stolen fuel)
KPC lied about Fuel Stocks (Missing/Stolen fuel)
22 comments:
Looks like we are back to the bad old days of KPLC and other very mismanaged gova institutions.
One thing I know, if the slumberer was awake, we'd have a confirmed finance minister and KPC IPO (OFS) would now be on the planning route for a listing in March.
On KPC-the MD has been sent home so that does vindicate what you said earlier
MainaT: Mon ami... the problem is that KPC's blunders has led the sheep aka public to support price controls which will spawn even larger scandals...
Honestly, does anyone think anything at all will be done?
Will KACC actually do any investigations leading to any convictions (note; I'm not jumping the gun and asuming Okungu is guilty or innocent)?
C'est vraiment incroyable.
Chmeee: Corruption aside... it's the idiocy of the majority of the Kenyan public to blame the Oil Marketers (private sector) for ills caused by the government sector!
I fear the price controls on oil products will lead to massive corruption as seen in the maize sector which sees new scandals daily since the price controls were introduced...
MainaT: What I find amusing is that the Oil Marketers took all the 'hits' lying down but have the last laugh...
Oil Marketers (e.g. Kenol, Total, etc) were accused by almost all & sundry of being 'hoarders, profiteers, etc' but they gave enough rope to KPC to hang itself!
I recall ur comment that KPC 'claimed' to have pumped 10mn liters which was not being collected by the Oil Marketers thus creating a shortage whereas the OM's claimed there was NO fuel at the depots... so... now who do you believe?
Yep, I am one of the kenyans who believed KPC. Transparency can't come soon enough in Kenya. Worryingly, Kiraitu "angro reasing is the scandal that never was" Muringi believed it too.
I read somewhere that KCB had used this oil as collateral to lend to Triton. Kubaya!
Coldtusker, Kenyans are in a quagmire. They cannot rely on the govt and the private sector sometimes goes berserk e.g. selling fertilizer for Ksh 6,000 per bag compared to the previous Ksh 1,500, but if I had to make a choice between the two devils, I'd prefer the private sector. Looks like KPC fired the Operations Manager for nothing. Ati his crime, "he stopped pumping oil to the marketers" Kumbe there was no oil to pump!
Competition solves 'shortages'... so the fertilizer issue is a bogeyman...
Let anyone who wants to import fertilizer (quality to be checked by competent folks) do so...
Do remember that fertilizer prices had jumped all over the world due to:
1) increased short-run demand vs available supply
2) increased raw material (oil) prices
3) increased freight costs
4) KPA (port congestion) thus extra costs
5) increased working capital means increased increased financing costs
So... oil went up by almost 500% ($30 to $147)... so why not fertilizer prices?
Once again an unfortunate and embarrassing series of events for the Government of the day (GOK). It is now safe to conclude that we can expect a decent-sized scandal on average every year in Kenya. While there's certainly nothing "decent" about scandals, it baffles me that this happened on GOK's wide-eyed watch; there was no slumber as had been earlier suggested. The oil industry, unlike any other sector of the Energy Ministry, is heavily punctuated with checks and balances - including checks and balances for the aforementioned checks and balances! This is, for obvious reasons, because oil constitutes a huge proportion of GOKs tax revenue.
KPC will be hard pressed to explain their preferential treatment of Triton given that their retail market share has never been anywhere near 1% (ever - I have the figures) and yet allocation at KOSF and subsequent winning of industry open tenders have been standard practice. If it were up to the people of Kenya, GOK would not be spared on this one. The Ministry of Energy (MoE) has been adamantly vocal about OM atrocities, which have been largely erroneous. Clearly he forgot to check his back yard before peering over into his neighbour's to dig for skeletons. KPC's inefficiencies and ineptitude have finally caught up with them. Give a desperate man enough rope and watch him hang himself. I work in the Oil Industry (hence my anon.) and can assure you of one thing - a lot goes on behind the scenes that will not be brought to light. Oil is too lucrative in a consumer market like Kenya and what we're witnessing now is merely one wrong turn in an otherwise perfectly assembled set of dominoes. Nothing is a mistake in the oil industry - including the shortages.
I'm a believer in the private sector, laissez-faire etc. My sympathy goes out to KCB who took one for the banking team and the kenyan public who will have to contend with even more oil shortages should the MoE proceed with its benign efforts to re-introduce price controls. The OM will still profit either way.
These Grand Coalition Govt is to grand for optimum management. Do you remember the English saying, "Too many cooks spoil the broth"? That's what is happening to the management of Kenyan Govt affairs. Kibaki and Raila should agree to cut the cabinet to 15 to 20 ministeries. Doing that would minimize the number of people with power to screw up things, and they should chose clean clean people. Just maybe, things can get better. But when we have 40 of them trying to manage the govt, things are certainly going to be worse than change for the better.
Anon 2.38: Thanks!
Please tell us more.
The OMs have been blamed for all sorts of ills... I would not be surprised if some prick in gov't blamed them for the Post-election violence!
Why didn't the OMs bring the fraud/scam to Kenyan's notice earlier when OMs were being blamed for 'hoarding'?
Thanks Coldtusker. I could go on and on about the oil industry. You're absolutely right in that it would appear as though the OMs never blew the whistle. But the truth is that they did. They always did. The responsible OMs always voiced their concerns through the appropriate channels (PIEA, MoE etc). You'll soon discover that OMs in Kenya fall starkly into two categories - those that "care" about what happens in the industry and works with the MoE to formulate and advise on energy policy relating to oil while generally ensuring that the business environment is favourable for themselves. The other lot simply don't "care" much for the political side shows. They will attend the various forum meetings and even contribute to agenda but their overall position is largely to drift along with what those that "care" propose. After all, the "carers" do know what they're talking about having been in the business for 50+ years in Kenya.
Back to your question. The problem was with GOK (MoE) who has taken plenty of issue with OMs so-much-so that they failed to distinguish between fact and fiction. By the time the KPC train hit them, they were still debating as to whether or not it was an oncoming train. OMs in the present deregulated pricing regime make serious margins (that I can't disclose) but the bulk of the pump price still boils down to cost of product + a large segment of GOK duties and taxes. MoE loves to play this back and forth Mickey Mouse game of tennis asking OMs to lower their pump prices when they know full well the constituent price build-up. If you think I'm lying, ask yourself why the National Oil Corporation of Kenya (NOCK) has not succeeded in creating the pricing benchmark it was created and mandated to do? Are their prices significantly lower than the OMs? No. Should they be? Well, being the GOK, I would imagine they don't have to remit duties and taxes... you figure out the rest.
What's the outcome of all this? The Ministry's stand to re-introduce fixed margins... I think we have sufficiently demonstrated that the Ministry's focus has been skewed towards settling vendettas. Remember the fuel shortages? Majority of times there has been a fuel shortage in Kenya has been due to KPRL and KPC's combined inefficiencies. There have been times when KOSF storage tanks have been full to the brim but the refinery couldn't operate... then the pipeline simply couldn't cope with the demand that has been increasing year-on-year, the macro-economics of which I will not venture into. But again, OMs have borne the brunt of the Ministry's blame with accusations of hoarding. Take it from me, hoarding only profits small-time independents. When you have 7 figure working capital cycles, your finance costs escalate by the day and it serves no purpose sacrificing your margins for a quick buck when you know full well that you'll be paying more in OD interest to the banks.
Lastly Coldtusker, you should not discount the political muscle involved in this scandal. Remember that Triton was to buy out BP's shares from its joint-venture operation with Shell. Now here's one for the kids. When Shell exercised its pre-emptive rights to purchase BP outright, GOK refused claiming anti-competitive advantage and frog-marched Shell out of the deal citing the monopolies act... do you smell something fishy? No? Remember that Shell & BP have been in JV for 50 years, they operated as one company seamlessly with shared revenues and expenditures. How would Shell's purchase of BP's shares create a monopoly when they were in essence one and the same entity in Kenya? The deal sat in limbo for 6-months while GOK "weighed out the options". Of course in reality we know it wasn't GOK who was pulling its weight on the matter, rather it was the MPs/Ministers who financially backed Triton who were delaying the process so that they could play their hand in the grand scheme of things to clinch the lucrative deal.
Rgds,
Anon 2:38
Tx Annon-we are being played as always
Anon 2.38 from prior post: May I post your comments & attribute them to you as a blog entry?
Anon 2.38:
(1) Did KCB loan money to Triton for political reasons i.e. political pressure?
(2) Other OMs have known about Triton's problem so why did KCB loan money to Triton?
(3) Is KPC liable for the loss to KCB?
Sure, most welcome.
Rgds,
Anon 2:38
Coldtusker:
Will respond to your questions after work.
Anon 2:38
Who are the are the invisible "political correct" muscles behind Triton and Yagnesh Devani?
Who is yagnesh devani and what are his links to Raila Odinga?
I'm going to start looking into this.
Too many Anons... so who is who?
I will only respond to Anon 2.38...
Yep, I am one of the kenyans who believed KPC. Transparency can't come soon enough in Kenya. Worryingly, Kiraitu "angro reasing is the scandal that never was" Muringi believed it too. I read somewhere that KCB had used this oil as collateral to lend to Triton. Kubaya!
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