Energy bosses' arrests expose racket to import poor quality fuel

Thursday night arrests of top energy sector chiefs by Directorate of Criminal Investigations (DCI) officers have burst open an unholy conspiracy, exposing a grand scheme to let substandard fuel into the country that would have put Kenyans’ lives at risk.

Kenya Pipeline Company Managing Director Joe Sang, Petroleum Principal Secretary Mohamed Liban and Daniel Kiptoo, the Director-General of Energy and Petroleum Regulatory Authority (Epra), were arrested and held at Gigiri Police Station.

The three top players in the energy sector ­– the fuel distributor and accounting officer and regulator – were arrested for allegedly scheming to import substandard fuel into the country.

A senior official at the Petroleum Department, Simon Wafula, was also arrested during the Thursday swoop.

The arrests are based on an alleged scheme by the officials to exploit the looming fuel crisis occasioned by the US, Israel-Iran war that has had some regional countries adjust fuel prices.

The Director of DCI, Mohammed Amin, on Friday confirmed the arrests saying: “We are holding four individuals but we are still looking for oil dealers involved in the scheme.”

Investigators told the Saturday Standard that the officials allegedly pushed for the release of a substandard fuel consignment .

It emerged that the fuel in question did not comply with the quality specifications for domestic use and hence was unfit to enter the Kenyan market.

Kenya runs what appears to be a strict regime to test fuel products in its bid to guarantee quality and safe fuel.

The process, which is managed by the Kenya Bureau of Standards (Kebs) and  Epra, starts when fuel is being loaded onto ship tankers at the source markets to be discharged at the Port of Mombasa.

Kebs has contracted inspectors who undertake testing at the load points and also at discharge at Mombasa. The Kenya Pipeline Company (KPC) also runs laboratories where it tests the quality of fuel upon receiving it and before discharge to oil marketing companies.

The inspection regime also oversees fuel transportation on road and pipeline, as well as petrol stations, where samples are collected from petrol stations randomly and tested.

Tight as it appears to be, the system continues to be tested by shipments that fail to meet the standards but also by rogue players in the local market dealing in dirty fuel.

The Saturday Standard established that tests conducted by internal quality assurance staff at KPC failed to clear the consignment into the country.

The three officials had, however, been working to clear the shipload of the substandard fuel into the Kenyan market, even after the quality assurance report condemned the petroleum products.

The trio, capitalising on the current oil crisis, it emerged, hatched a scheme to release the fuel.

Sources reveal that they approached senior ministry officials to rope into the deal in vain.

It emerged that earlier last week, KPC Board Chair Faith Boinett had forbidden Sang from proceeding with the deal.

When word reached President William Ruto, he ordered the Head of the Public Service to deal with the trio decisively.

On Thursday, the officials had been summoned earlier in the day by the Head of Public Service, Felix Koskei, who instructed them to report to State House.

They arrived at midday, expecting to meet the President, and were kept waiting until 4 pm. Unbeknownst to them, different teams from the DCI were simultaneously raiding their homes.

Kiptoo was the first to be arrested as he left State House, followed closely by Liban.

Sang, however, was trailed by sleuths to Karen Blixen, where he had gone for dinner.

Plainclothes officers joined him at the restaurant, watching patiently as he ate. They waited until he paid his bill, tipped the waiter, and reached for toothpicks before pouncing on him.

A subsequent search of his house uncovered what detectives estimate to be more than Sh100 million in cash.

By evening, Kiptoo was pleading with the OCS of Gigiri Police Station to allow him to seek medical treatment, citing ill health.

“The OCS is between a rock and a hard place. The orders to arrest them came directly from the President himself,” revealed a source from the DCI.

Yesterday, KPC announced the appointment of the General Manager-Finance, Pius Mwendwa, as the acting Managing Director following the arrest of Sang.

The announcement was issued last evening in a statement signed by Boinett, reassuring stakeholders that operations at the company remain stable and unaffected.

“To ensure business continuity in the intervening period, Pius Mwendwa (GM-Finance) will discharge the duties of the office of the Managing Director,” the statement read.

The arrests come against the backdrop of Kenya’s ongoing efforts to stabilise fuel prices through the Government-to-Government (G2G) oil import deal.

In June last year, the government extended the agreement with Gulf nations until 2028.

Energy Cabinet Secretary Wandayi explained to Members of Parliament that the deal continues to stabilise prices, especially in light of Uganda’s decision to import oil independently.

President Ruto’s administration signed the G2G agreement with three oil-producing companies from the United Arab Emirates and Saudi Arabia in March 2023.

The deal, aimed at importing fuel on credit, was designed to lower rising prices and stabilise the exchange rate.

Last week, President Ruto stepped in with concrete measures to protect ordinary Kenyans from the growing anxiety over rising fuel prices and other commodities, particularly amid the escalating Middle East conflict.

In a statement released on Monday, March 30, Ruto disclosed that he had convened a comprehensive meeting with the Ministries of Energy, Agriculture, and Trade, alongside the National Treasury, Central Bank of Kenya and private sector representatives to assess the situation.

“In light of the evolving geopolitical developments, I received a comprehensive briefing this afternoon from the Ministries of Energy, Agriculture, Trade, the National Treasury, the Central Bank, as well as private sector players, on the situation and possible recommendations on the way forward,” stated the President .

The meeting focused on how the Gulf crisis is affecting Kenya, particularly in terms of fuel, food supplies, and key exports, and what the government plans to do to limit damage to the economy and everyday livelihoods.

Ruto assured Kenyans they would not be left exposed to sudden price shocks, thanks to the functional G2G fuel procurement deal already in place.

“The Government-to-Government fuel procurement arrangement has cushioned Kenyans from immediate shocks. This strategic intervention has mitigated price increases, ensured security of supply, and proven to be both prudent and forward-looking,” he stated.

Ruto described the arrangement as a key buffer against external shocks, adding that the Ministry of Energy and the National Treasury are prepared to roll out additional interventions if international fuel prices continue to climb.