Kenya Pipeline Corporation Chairman John Ngumi was hard-pressed to explain the role he played in arranging the financing for the new Mombasa-Nairobi petroleum products pipeline.
The Senate Committee on Energy yesterday questioned Mr Ngumi on the possible conflict of interest while working for Stanbic in 2014, which was the lead lending institution in a consortium that advanced Sh35 billion to KPC for the construction of the new pipeline.
The pipeline, KPC said, is 99 per cent complete and is due for commissioning in July after more than two years delay.
Ngumi was appointed KPC chairman in 2015, before the deal was concluded, which, according to members of the Ephraim Maina-led Senate committee, amounted to conflict of interest.
Susan Kihika (Nakuru ) said it would have been difficult for Ngumi to push the interests of the banks and a few months later chair the board that would approve the proposal by the banks.
“There does seem to have been a huge conflict of interest,” said Kihika.
Mr Ngumi told the committee he was aware the possible conflict and made no decisions affecting the pipeline financing deal as chair of KPC.
“I realised there was a potential conflict of interest when I was appointed as chair of the board of KPC and I recused myself from further negotiations. I also took a painful decision to resign from Stanbic,” he said.
A consortium of six banks led by Stanbic won the deal to lend KPC Sh35 billion.
Other members of the consortium are Standard Chartered, Rand Merchant (South Africa), Citibank, CBA and Cooperative Bank. Other banks that had bid to give the loan to KPC were Credit Suisse (Switzerland) and a consortium of Barclays Bank and Nedbank (South Africa).
Heavy criticism
The senate committee also accused the board and management of pulling in different directions when managing affairs of the company.
Ledama Olekina (Narok) said from the presentations made by the company, the board appeared to have given little or no contribution in the affairs of the company.
Olekina said the board rarely came to the defence of management and employees when they have come under heavy criticism, including allegations of corruption and theft.
“It appears the board does not involve itself even when there are billions of taxpayers funds being spent in different projects,” he said.
Ngumi, however, said the board had been closely monitoring progress on different projects.
The company also presented to the committee projects for revenues and profits for the 2017/18 financial year. It expects revenues to reach Sh27.9 billion in the year to June 30, 2018, pretax profit is projected to reach Sh12.6 billion.
Over the past six years, it has generated Sh65 billion in profits before tax and paid Sh30 billion in taxes.
