How KPC Bosses Swindled The Company Ksh100 Million

The Kenya Pipeline Company (KPC) is set to bleed out at least Ksh200 million to fraud in the purchase of materials for Line five (Mombasa to Nairobi).

Kahawa Tungu understands that KPC bosses have already pocketed Ksh100 million in the saga, after purchasing substandard materials for the work.

Those implicated in the scandal include KPC directors, managers and engineers whom we understand went for factory acceptance tests (FAT) in China for the 20 inches diameter pipes (X–62s and X-’65s).

According to the standards of the American Pipe Institute (under which the pipeline was designed), the materials must be accompanied by a document called a Mill Test Certificate and that each Pipe must have a ‘heat number’ on it matching the Mill Test Certificate for verification.

“Should there be a hitch or problem in the entire operational history of the New line five (5), these documents were to give assurance,” says an insider aware of the dealings.

Read: Gov’t Appoints Total Kenya Director of Strategy Dr Macharia Irungu KPC Boss

However, sources who spoke to Kahawa Tungu on condition of anonymity intimated that materials of unknown nature (composition) were used in the project, posing a risk not only to the operators of the line but also to the Kenyans living near the pipeline.

For instance, KPC used Valves known as AFT from Dubai. However, Dubai has no know factories for pipeline valves, and if there are, none can manufacture 20-inch-diameter valves.

This means that the FAT exercise in China could have been a fraud that was meant to hoodwink Kenyans into thinking that KPC was building a standard pipeline.

Kahawa Tungu is informed that millions were paid for the FAT exercise, which could have gone into the pockets of the KPC bosses.

Read: Standard Chartered Bank Ordered To Produce Statements In Ksh827 Million KPC Scandal

Also, the whereabouts of the Mill Test Certificates of all the line pipes are not known, if at all they are there. The certificates are guarantee documents between the manufacturer and the buyer (KPC) and are also used for conformity inspection by the Kenya Bureau of Standards (KEBS).

The Pipeline, completed in 2018, was expected to lower fuel transportation costs to Nairobi, consequently lowering the fuel costs.

However, KPC has suffered immense losses in fuel leaks along the new line five, suspected to have been caused by the use of substandard materials.

The line has been experiencing several leakages which take weeks to find out and repair, the biggest being at Kiboko, Makueni County where at least 551,000 litres of fuel valued at Ksh63 million was lost.

Following several leaks and faults discovered, KPC in April 2021 gave a multimillion contract to a company called Miranda East Africa Limited for In-line Inspection and material grade determination for Line 5.

Of the millions agreed, Rafiki Micro-finance agreed to guarantee a payment of Ksh20 million in case KPC defaulted. This means that the taxpayer is going to bleed out at least Ksh20 million, whether work is done or not.

The line was constructed by Zakheem International at a cost of Ksh48 billion.

However, in 2018, the Energy and Petroleum Regulatory Authority (Epra) faulted the line for illegal design changes, that saw sensors excluded from the line.

In 2018, senators directed that Epra should recommend to DCI the prosecution of four KPC general managers in charge of infrastructure who oversaw the construction of the line. Senators also want KPC’s local and foreign contractors and the main contractor, Zakheem International prosecuted.

The suspects are thought to have pocketed the amount meant for the sensors, which was in the original design of the pipeline.

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