Taxpayers lose $2m in Kenya’s early oil scheme

Saturday June 6 2020

A truck loaded with crude oil enroute to Mombasa from the oilfields in South Lokichar

A truck loaded with crude oil en route to Mombasa from the oilfields in South Lokichar. FILE PHOTO | NMG 

NJIRAINI MUCHIRA
By NJIRAINI MUCHIRA
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Kenyan taxpayers have lost $2 million to the crude oil trucking scheme that expired last week after galloping $14 million.

And the loss is expected to grow further as another 100,000 barrels stored in tanks at the Kenya Petroleum Refinery Ltd in Mombasa will attract storage charges for unknown period.

Strangely, despite British firm Tullow Oil announcing the expiry of the early oil pilot scheme (EOPS), the National Treasury has allocated Ksh240 million ($2.2 million) to the Ministry of Petroleum earmarked for "early monetisation of first oil project."

The EastAfrican has seen budget allocations documents in which the Ministry of Petroleum had requested for Ksh370 million ($3.4 million) in the 2020/21 budget has however been slashed by Ksh130 million ($1.2 million).

Since the launch of the controversial scheme that has largely been shrouded in secrecy, the government has maintained that all the costs burden were the responsibility of Tullow.

The expiry of the contract has ignited tensions in Turkana county where local communities where among the beneficiaries albeit in small ways, something that prompted Petroleum Cabinet Secretary John Munyes and Principal Secretary Andrew Kamau to visit the area on Wednesday where they held talks with local leaders to address concerns.

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Efforts to reach the two government officials proved futile after they failed to respond to our telephone calls.

Despite marketing the scheme as critical in introducing Kenya's crude to the international market amid criticism that it was a loss-making venture, the project has expired with only one consignment of 240,000 barrels being exported yet the target was to export at least two consignments in two years.

However, for the three private companies—Primefuels Kenya Ltd, Multiple Hauliers and Oilfield Movers—whose directors have remained in the shadows and which were contracted to transport the crude via road from Lokichar in Turkana to Mombasa, the scheme has been a money-minting project.

"We came out clearly that the EOPS was a loss-making venture and a burden to the taxpayers. This has come to pass," said Charles Wanguhu, Kenya Civil Society Platform on Oil and Gas co-ordinator.

On Tuesday British firm Tullow Oil together with its joint venture partners Total and Africa Oil announced the EOPS has expired after running for a two-year period.

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