Kenya Bleeds Millions Over Uganda’s Snail Speed On Joint Oil Jetty Construction

Kenya Bleeds Millions Over Uganda’s Snail Speed On Joint Oil Jetty Construction

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By Spy Uganda Correspondent

Nairobi: Kenya Pipeline Company’s (KPC) Sh2.6 billion Kisumu oil jetty depreciated by Sh150 million in 2019. According to KPC, this was a result of Uganda’s failure to put up a reciprocal facility on Lake Victoria.

The depreciation of the jetty has been captured in the State corporation’s annual report to June 2019. Since then, there has been little change, with the facility remaining underutilized.

Auditor General Nancy Gathungu has now raised concerns about the continued disuse of the facility, noting that the taxpayer is not getting value for money.

“Construction works on the jetty were executed from May 2017 to March 2018 when the jetty was completed and handed over to the company by the contractor. The assets were thereafter capitalized in 2017-18, and as of June 2019 had been depreciated by Sh150.04 million,” said the Auditor General in her report accompanying KPC’s annual report, which was tabled in Parliament recently.

The Auditor-General noted that KPC needs to further assess the value of the facility.

“Although management has indicated that some progress has been made in the construction of one of the two planned similar jetties in Uganda, there is no certainty when these will be completed and operationalized,” said Gathungu in the report.

The jetty was dubbed a game-changer in the transportation of petroleum products in the region and was expected to help Kenya easily woo back companies importing petroleum products to the region from Tanzania.

It was expected that refined petroleum products would be moved through the pipeline between Mombasa and Kisumu, and thereafter to Uganda, Rwanda, and the Democratic Republic of Congo with ease and cost-effectively.

In addition to the jetty, other measures to reclaim the KPC’s market share are setting up a liaison office in Uganda, having a friendly pipeline tariff for companies importing through Kenya, and assigning special storage space for Uganda and Rwanda.

KPC had in July last year told the Senate Committee on Energy that one of the Ugandan jetties was expected to be ready by November last year, after which transportation of petroleum products on Lake Victoria would start in earnest.

Mahathi Infra Uganda, the consortium of private sector players who have been building one of the neighboring country’s jetties, recently reported that the project is nearing completion and is expected to be ready for use by March this year.

The firms said the Covid-19 pandemic had complicated work, resulting in unforeseen delays.

Over the year to June 2019, KPC reported a net profit of Sh2.05 billion, a 76 percent decline from Sh8.57 billion it had made in 2018.

The major drop was on account of provisioning for some Sh43 billion owed by an oil marketing company that has disputed KPC’s claim and lodged a lawsuit.

Several oil marketing companies have also contested some Sh1.8 billion in penalties levied for delays in picking their products from KPC facilities.

The company had introduced the penalty in a bid to reduce the time firms take to collect petroleum products.

The marketers, however, protested this, and it appears unlikely that KPC will be able to collect the fine.

But the company’s revenues increased to Sh31.5 billion in the year to June, a 14 percent growth from Sh27.7 billion previously.

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