Kenya Airways (KQ) former finance head Alex Mbugua colluded with cartels to fleece the airline dry through fuel tenders, insiders have revealed.
Information reaching Kahawa Tungu indicates that Mbugua colluded with cartels at Gulf Energy to sell fuel to KQ at exaggerated prices, which saw the carrier lose at least Ksh400 million per year.
Our source intimates that Gulf Energy sold Jet Fuel to KQ with 15.3 USD cents (approximately Ksh16) per litre above the market price, despite there being cheaper options.
The money was shared among the cartels as kickbacks.
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With the departure of Mbugua and his cronies from KQ, the fresh team that took over realized the massive leakage of funds and after a while shifted KQ supplies to low cost vendors at Jomo Kenyatta International Airport (JKIA) such as Oilibya and international re-seller ASM supported by Kenol Kobil.
The shift saved KQ over USD4 million (Ksh400 million) per year.
Gulf Energy found themselves high and dry; suddenly deprived of billions of shillings that was coming their way by selling Jet Fuel above market rates and further this deprived the cartel’s income.
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Through political shareholders, Gulf Energy sought to topple Oilbya and ASM from the contract through fabricated arguments, but did not succeed.
It is also alleged that Gulf Energy tried to use Energy and Petroleum Regulatory Authority (EPRA) to come up with outrageous regulations for oil marketing; which they believed would force ASM out of Kenya thus removing a big barrier in supplying High Priced Jet to KQ.
However, Human Rights activist Okiya Okoiti Omtata went to the Nairobi High Courts and successfully obtained orders that suspended the regulations until September 23, 2019. EPRA is yet to challenge the verdict.
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“Gulf Energy has now moved to the Competition Authority of Kenya with a fabricated petition (in a bid to outdo its competitors),” intimates our source.
Gulf Energy went ahead to present a petition in parliament, alleging that ASM has no infrastructure or equipment at JKIA and is not licensed by the Kenya Airports Authority to operate from any airport in Kenya.
However, KQ Chief Financial Officer Hellen Mwariri said that Gulf Energy was simply bitter because KQ had refused to do business with it and that is why it was petitioning Parliament with lies.
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Mwariri said KQ had harmoniously entered into a contract with Gulf Oil in November 2017 to provide 35 per cent of the 336 million litres the carrier needed to take it through the year.
But in June 2018, Gulf Energy decided to change the terms and slapped KQ with a Sh5 increment per litre, against the initial agreed terms.
When KQ resisted, said the officer, Gulf Oil threatened to pull out its oil, which would have left the carrier incapacitated.
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