How fuel deal fallout has triggered Sh3.2b loss for supplier

It is now emerging that the company contracted to supply 96,000 metric tons of fuel could register losses of up to Sh3.2 billion (USD25 million) following the cancellation of the contract while shipment was enroute to the country.

Oryx Energies Kenya Managing Director Angeline Maangi on Tuesday told the Senate Committee on Energy they are at a loss on what to do with millions of litres of fuel.

They said other than correspondence sent to the government via email on April 9, there have been no further negotiations or engagements with the Ministry of Energy but are willing to engage constructively.

“The losses as at today (Tuesday) based on the market rates stand at USD25 million. We are stuck with millions of litres, and we do not know where to take them,” she said.

This even as committee members, led by Narok Senator Ledama Olekina said that everyone, including the Energy Cabinet Secretary’s office, may have been in the loop as the process to procure the fuel was conducted, as he referred to the correspondence presented by the oil company.

“Everyone was in the loop… meetings just did not happen. You are at a serious sunken cost if the government does not take the fuel. Where is the 96,000 metric tons of fuel now? posed Olekina.

At the same time, KPC acting Managing Director, Pius Mwendwa, found himself on the receiving end over inconsistencies in his responses as he responded to questions the committee raised and was put on the spot for among other issues, failing to disclose the storage capacity of the Oil Marketing Companies (OMCs).

Mwendwa affirmed that KPC does not have oversight or visibility over petroleum stocks held in facilities owned or operated by OMCs or other third parties outside its infrastructure and could also not provide information on a breakdown of petroleum products held on behalf of OMCs.

“KPC is unable to disclose information relating to individual OMC entitlements without committing grave breaches of contract with the said OMCs through unauthorized disclosure of information to persons who are not parties to the agreements signed,” said Mwendwa.

But the committee was not convinced that KPC does not have knowledge of the storage capacity of the OMCs and how long they can supply the commodity to consumers against the backdrop of the Middle East crisis.

As this happened, Maangi also explained the procurement procedure on the part of Oryx saying the company received an invitation on March 19 by the Ministry to submit a proposal for additional deliveries of Premium Motor Spirit (PMS) to bolster operational stock reserves for Kenya and the region amid the Middle East conflict.

The invitation was communicated directly to the company’s Managing Director from the official email account of the Principal Secretary, State Department of Petroleum, with the MD saying she was unaware whether the request was issued publicly to market participants or selectively to specific firms.

“The invitation received from the Department was sent directly to the company and no other oil marketing companies were included in the email circulation list,” she said.

She added that the email of March 19 from the PS constituted a direct Request for Proposal (RFP) for PMS, setting out tender requirements, timelines, bid security and evaluation criteria.

On March 19, the company submitted its quotation, confirming its capacity and proposing delivery between March 25 and April 20.

On March 25, she said the company received an email confirming acceptance of its cargo as per the proposal, after which it issued a letter on March 26 accepting nomination to supply 60,000 metric tons.

She further told the committee that on March 27, the company informed the ministry it had secured an additional 36,000 metric tons of PMS, which could be delivered by March 31.

Maangi said the invitation was received at 10:11am on March 19, with a submission deadline of 12:30pm the same day, giving a window of two hours 19 minutes. The company submitted its bid at 12:25pm.

The ministry’s email set delivery between March 28 and April 2, while the company proposed March 25 to April 20. Acceptance confirmed delivery of 60,000 metric tons for April 5–7, but the shipment was later cancelled while en route.

The additional 36,000 metric tons were also accepted but cancelled on March 31 before delivery. The company priced its offer at USD253.94 per metric ton against a G2G rate of USD84, a difference of USD169.94.

One Petroleum Limited did not appear before the committee, sparking debate among senators.

Olekina questioned the contract dynamics and cited concerns raised in the company’s letter warning that the inquiry may not be constitutionally mandated.