Chief auditor queries KPC projects’ billions

Wednesday, December 9th, 2020 00:00 |
Auditor General Nancy Gathungu. Photo/PD/File

Mercy Mwai @WanguMarci

Kenya Pipeline Company (KPC) is on the spot over unaccounted for billions of shillings it spent on various projects across the country.

 In a report tabled in the National Assembly, the Auditor General, Nancy Gathungu, raised concerns that some projects were incomplete or under investigation by investigating agencies due to misappropriation of funds or procured un-procedurally.

 Among issues in question include the construction of a new Mombasa-Nairobi Oil Pipeline, supply of hydrant pit valves, procurement of consultancy services, construction of 74 projects, lack of experts in the KPC board and lack of title deeds to prove ownership of land.

 In the latter, Gathungu blamed the company for lack of titles deeds for two parcels of land valued at Sh1 billion. 

She regretted that available information indicated the title deeds of the two plots on which the company’s Embakasi and Mombasa depots are located were issued in the name of Kenya Airports Authority (KAA), the legal owners of the larger piece of land from which the two parcels were hived off.

 “Although the management has explained that the National Lands Commission (NLC) has requested KAA to surrender the original title for issuance of subtitles for the two parcels, no Title deeds have been issued to the company yet,” reads the report in part.

 On the construction of a new Mombasa–Nairobi Oil Pipeline referred to as line five that has so far incurred a cost of Sh51.4 million, Gathungu regretted that at the time of the completion in June 2018, the project engineer had submitted eight variation orders due to change of design, specifications and omissions of works totalling to Sh3 billion, out of which only Sh1.7 billion was approved for payment.

She also indicated that the contractor submitted five other Extension of Time (EOT) with claims amounting to Sh20.9  billion, later contested by project engineer that saw total claims for four EOT reducing to Sh4.5 billion, but the fifth claim amounting to Sh1.6 billion was not reviewed.

Although the project, started in July 2014 following the award of the tender worth Sh49.6 billion, is completed, the contractor moved to court to seek payments of all the claims.

 “Construction of the pipeline (line 5) was completed and the line commissioned during the year ended June 30 2018. However, the contractor filed a petition at the high court seeking payment of all claims amounting to Sh19.4 billion,” adds the report.

 With regards to the tender for the supply of Hydrant Pit Valves and spare parts for two years operations to a vendor through direct procurement amounting to Sh655 million, Gathungu said the matter is currently under investigations by Ethics and Anti corruption Commission. However, the procurement process and award of the contract was against the public procurement and Disposal Act.

  On the construction of 74 projects, Gathungu said 16 projects were audited, out of which 11 projects with an accumulated cost of Sh1.9 billion representing 69 per cent of the sample were found to be behind their respective execution schedules.

 Three of the delayed projects, worth Sh122.3 million, had stalled after their contracts expired or were terminated.

Resource waste

Gathungu said delays in project completion would deny taxpayers expected services that could result in increased project costs overruns and wastage of public resources.

 “A review of the company’s project management system disclosed absence of robust, documented risk assessment and project monitoring during project life cycles and project delays,” adds the report.

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