Inside Politics

Anxiety in the air as company hired for cheap gas plan folds

Tuesday, August 10th, 2021 00:00 |
Gas. Photo/Courtesy

Kenyans can kiss goodbye to the dreams of affordable gas scheme after the firm   awarded the multi-billion gas cylinder contract by Petroleum Ministry and the National Oil Corporation of Kenya (Nock) was put on sale by an administrator.

The consortium led by Allied East Africa Ltd which is under administration, is up for sale in an offer of assets “as-is-where-is” basis, raising concerns about another public procurement gone bad.

“Interested parties may visit the premises to inspect the assets with prior appointment or seek any information by writing to the administrator,” says PVR Rao, the firm’s administrator in an advertisement in a local daily newspaper.

Final bids are expected to be sent latest September 15, 2021 in what will lead to the demise of the firm which was tasked with the duty to provide affordable gas cylinders under the Mwananchi Gas Project using taxpayer’s money. 

Through the now infamous scheme, some four million houses were to be supplied with a 6kg LPG gas cylinder and a burner at a discounted price of Sh2,000 each. 

This was ambitious project targeting the poor was actualised through a subsidy plan initiated by then Ministry of Energy and Petroleum in the 2016/17 financial year.

National government borrowed Sh2 billion from PTA Bank, East African trade-finance bank based in Burundi, to finance the LPG programme in the LPG project, which had initially been projected to cost in excess of Sh14.5 billion, with State-owned oil marketer Nock expected to import at least three million gas cylinders.

Low-income earners

Taxpayers are currently servicing what was an ambitious multi-billion shilling project to fast-track uptake of LPG among low-income earners, dubbed Project Mwananchi, the plan entailed introducing some 4.3 million cooking gas cylinders to low and middle income households.

But how a company on the brink of bankruptcy got the tender is still a raging debate long after a parliamentary watchdog committee chaired by Ugunja MP Opiyo Wandayi indicated that taxpayers did not get value for money from the project.

Now with the official liquidation of the firm which led to the collapse of the noble project to cushion Kenyans from using dirty fuel alternatives such as kerosene and charcoal and firewood, a lot of questions remain unanswered.

For example, why was the Sh3 billion tender handed over to Allied East Africa Ltd, despite being under administration, and why was there no due diligence when a make shift firm that then became part of four firms that were to supply Nock with 500,000 gas cylinders emerged tops?

Further, how a company that was unable to pay a Sh135 million debt managed to convince the State it could supply gas cylinders worth Sh300 million is still not known. 

The firm which was broke won the tender in 2016, only for the High Court to soon find  it was in default of a Sh135 million debt owed to First Community Bank.

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