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KENOL/KOBIL
Rank: Member Joined: 4/25/2008 Posts: 192 Location: Nairobi
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@ 2012 KPC is a utility, a transporter and a storage facility with limited capacity. They offer their services to all oil companies on a standard shippers agreement. Sensibly then, how can you guarantee all the OMC's in Kenya that you will give them storage? What would happen if all of them import product at the same time? What happens when there is power outage that disrupts pumping which inturn affects space (ullage)? KK has a joint facility in Shimanzi but it is not connnected to KPC system hence even if they did own one how would they transport to Nairobi? Do you think other oil companies would allow KK to pump fromtheir depot to The main pipeline at their expense? While it is true that KPC allocated unfair ullage to KPC, KK sabotaged an joint industry approach by withdrawing from the ullage committee. Itari muting'oe ihuragwo ngi ni Ngai
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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BGL wrote:KPC is 'TOO BIG' to go under! I think as long as it remains a parastatal it will continue to be mismanaged and the guts to label the demands of KK as wishful thinking.
Privatisation either via the NSE or strategic partner should bring in some professionalism. Arthur Andersen (28,000 strong US workforce) was 'TOO BIG' to go under! 
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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VVS, who would you put your money on to be the next African despot to vacate power? Sub Saharan Africa tusiwachwe nyuma na hii revolution GOD BLESS YOUR LIFE
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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milken wrote:VituVingiSana wrote:
1) So coz JS sued corrupt/inefficient KPC makes him a thug? Please explain.
2) KPC is in charge of ullage - obviously you haven't read the case - & they over-allocated space to Triton [now you will tell me devani was an angel] i.e. KK was locked out coz Triton had more fuel in the tanks than their ullage allocation.
3) LOL... So if a bully beats 5 kids. Then 1 has had enough & fight back, you call the fighter a thug? The other OMCs were wimps. KK stood & fought the bully [KPC]
4) So Ahmed was the arbitrator by default. So what? It was part of the Agreement. That's what Agreements are for. As someone said... the court could have kicked it out OR reduced it & have done neither so far.
1. This is guy who has been MD and chair for over five years and who wields more power than the entire board. Have you seen anything like a board committee in their annual reports? Is it a coincidence that only KK has managed to fight with MOE, KPRL, KPC at the same time? I have dealt with him a number of times and can vouch for his thuggish character. False - I will discuss this matter but after you have the facts straightened out. If you insist you have the correct facts then I can't help except direct Wazuans following this thread to the Annual Reports for the past 5 years some available on the website.
*** Personal question: Why did you deal with him more than once AFTER you thought he was thuggish?2. You are the one who has no clue here. While it is true that KPC overallocated ullage to Triton, the shippers agreement does not guarantee anybody ullage hence KK cannot say that they were denied ullage. (It is common practise all over the world that utilities can not be sued for inciderntal losses occassioned by their inability to supply the service). So it is true KPC over-allocated ullage to Triton. Sounds like an admission by KPC of wrong-doing. Why did they do so?
Is the Shippers Agreement btwn KK & KPC a standard document/agreement? If yes, can you get me a copy? [I will pay for any reasonable expenses]
I have NOT seen the contract between KPC & KK but I assume the courts have looked at it. Is it a public document?3. The other marketers did not chicken out but they listned to their lawyers who looked at the agreement and told them that they did not have a point. JIS ignored that Refer to number 1. All lawyers are not equal. All CEOs are not equal. Some are simply better than others.
Are the Shipping Agreements 'standard' across all OMCs & KPC?
Does KPC have no SLA or obligation to perform? [Or is it a matter of if we (KPC) do not do what we said we will, mta do?]4. Again you demonstrate some ignorance of the matter here. KPC lodged an appeal of the arbitrators award but KK contended that before the appeal is heard, KPC should deposit the award in an escow a/c. The court oblidged as this is the common practice so that one does not have to go to the court again to have the other bugger compelled to pay if he loses. Deposit the award is done on a without prejudice basis and will not influence the outcome of the court ruling. Please educate me. Wonderful. So what KK asked for (& court granted) is in line with 'common' practice i.e. deposit the cash/assets/bond into an escrow before an Appeal is heard.
My question: What if KPC does not follow the 'common' practice as ordered by the Court?
Does anyone know whether KPC deposited the KES 4.6 - 5.2bn as ordered by the Court? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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milken wrote:@ 2012
KPC is a utility, a transporter and a storage facility with limited capacity. They offer their services to all oil companies on a standard shippers agreement. Sensibly then, how can you guarantee all the OMC's in Kenya that you will give them storage? What would happen if all of them import product at the same time? What happens when there is power outage that disrupts pumping which inturn affects space (ullage)?
I thought imports had to be coordinated if you used common facilities e.g. KPC or KOSF. No ovyo ovyo imports. KK claims its imports were scheduled imports. Were Triton's scheduled imports?
Pumping - Shouldn't KPC have backup generators? Seems sensible since power cuts are/were common in Kenya.
KK claims the ullage was blocked for a long time. I think 1 month {not sure). I doubt there was no power at KPC pumping stations for 1 month
KK has a joint facility in Shimanzi but it is not connnected to KPC system hence even if they did own one how would they transport to Nairobi? Do you think other oil companies would allow KK to pump fromtheir depot to The main pipeline at their expense?
KK transports a lot of fuel by Road. All the deliveries from South coast to Lamu are done by road.
Also deliveries as far as Machakos are often done by road from SOT & Changanwe.
The joint facility at SOT [with Total but I may be mistaken] is used for private imports for local sales + exports.
While it is true that KPC allocated unfair ullage to KPC, KK sabotaged an joint industry approach by withdrawing from the ullage committee. So you do admit that KPC allocated unfair ullage to Triton [u say KPC but I think you meant Triton]. Seems a clear-cut case of wrongdoing by KPC regardless of all the rest. Of course, what I would like to know is whether you think KPC (or its employees) was not at fault for releasing Fuel to Triton AGAINST the provisions of the CPA. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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A rise in prices expected. How much? http://www.businessdaily...1/-/ovo8xvz/-/index.htmlGreedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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milken wrote:Sensibly then, how can you guarantee all the OMC's in Kenya that you will give them storage? What would happen if all of them import product at the same time? What happens when there is power outage that disrupts pumping which inturn affects space (ullage)? Then maybe KPC is chewing more than they can take. They should allow private companies to compete if they cannot as vvs said afford a generator and give clear guarantees to the importers on allocation. This I beleive would even bring the cost of pump prices down.
BBI will solve it :)
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Rank: Member Joined: 4/25/2008 Posts: 192 Location: Nairobi
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[quote=VituVingiSana]A rise in prices expected. How much? http://www.businessdaily.../-/ovo8xvz/-/index.html[/quote] FOLLOW LINK http://www.wazua.co.ke/f...s&t=11020#post148604Itari muting'oe ihuragwo ngi ni Ngai
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Rank: Veteran Joined: 12/9/2010 Posts: 894 Location: Nairobi
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[quote=VituVingiSana]A rise in prices expected. How much? http://www.businessdaily.../-/ovo8xvz/-/index.html[/quote] This article is saying that petrol is set to hit Kshs 100. That will be very high Don't wait for the Last Judgment. It happens every day. ~Albert Camus, The Fall, 1956
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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@milken - Please see my comments & questions above re: KPC, Triton, OMCs Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 4/25/2008 Posts: 192 Location: Nairobi
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VituVingiSana wrote:@milken - Please see my comments & questions above re: KPC, Triton, OMCs "I thought imports had to be coordinated if you used common facilities e.g. KPC or KOSF. No ovyo ovyo imports. KK claims its imports were scheduled imports. Were Triton's scheduled imports?" See my comments above that KK withdrew from the ullage nomination committee hence making their imports unscheduled.
Pumping - Shouldn't KPC have backup generators? Seems sensible since power cuts are/were common in Kenya. Am sure they have some generators but am not sure that all pumping stations are covered. It is worth noting that if KPC goes offline for two hours each day, that months ullage is compromised by 33,000M3KK claims the ullage was blocked for a long time. I think 1 month {not sure). I doubt there was no power at KPC pumping stations for 1 month KK ullage was blocked because after they withdrew from the ullage committee they resulted to bringing several unscheduled imports that were causing chaos in the industry. They were given the option of either rejoining the committee or lose ullage.KK transports a lot of fuel by Road. All the deliveries from South coast to Lamu are done by road. Also deliveries as far as Machakos are often done by road from SOT & Changanwe. Of course the pipeline is not a road with branches in every direction hence product has to be moved by road. However the pipeline moves AGO at te rate of 550M3 per hour. That means you will need to offload 18 trailers in an hour to match the pipeline. This is impossible hence you can not compare the pipeline to road transport. Additionally the pilepile is about 50cts per litre cheaper than road. When you add transport losses, theft and adulteration in road transport, the pipeline wins hands-downThe joint facility at SOT [with Total but I may be mistaken] is used for private imports for local sales + exports. While you can receive product directly in your facility from a vessel, KPRL or KPC (KOSF), KPC can not allow you to pump back that material in to pipeline for ownward transport to Nairobi (from Mombasa) or West Kenya (from Nairobi)Consequently, unless you are ready to use road transport as explained above it is not feasible to receive product other than that meant for coast market in Mombasa DepotsSo you do admit that KPC allocated unfair ullage to Triton [u say KPC but I think you meant Triton]. Seems a clear-cut case of wrongdoing by KPC regardless of all the rest. Considering that there was no stated way of sharing ullage, it will not be right to say that KPC were unfair. let the courts decide whether KPC breached the agreement with KK. An agreement that does not guarantee ullage. However, common sense disagrees with KPC's ullage allocation to Triton.Itari muting'oe ihuragwo ngi ni Ngai
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Rank: Elder Joined: 9/29/2006 Posts: 2,570
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@milken,vvs; Now that you are in agreement as per @milken's statement and I quote "However, common sense disagrees with KPC's ullage allocation to Triton.", let us have a break on this. Meanwhile demand 436,400 against supply 593,500 and price down to 9.75. If I had kwacha I would buy more. The opposite of courage is not cowardice, it's conformity.
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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If you ask me, I think people are selling to buy that CBK 30yr bond. It's a very good deal and won't keep your adrenaline rushing.
BBI will solve it :)
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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milken wrote:"I thought imports had to be coordinated if you used common facilities e.g. KPC or KOSF. No ovyo ovyo imports. KK claims its imports were scheduled imports. Were Triton's scheduled imports?"
See my comments above that KK withdrew from the ullage nomination committee hence making their imports unscheduled.
Does it mean ALL importers are part of the Ullage Nomination Committee? Isn't ullage determined by market share? [So if KK has 20% then it gets 20% 'allocation' of imports & ullage?]
KK claims the ullage was blocked for a long time. I think 1 month {not sure). I doubt there was no power at KPC pumping stations for 1 month
KK ullage was blocked because after they withdrew from the ullage committee they resulted to bringing several unscheduled imports that were causing chaos in the industry. They were given the option of either rejoining the committee or lose ullage.
Why would they withdraw from the ullage committee unless there was a stink in the industry. Something here does not seem right i.e. there must have been something that sparked it off. What was it?
KK transports a lot of fuel by Road. All the deliveries from South coast to Lamu are done by road. Also deliveries as far as Machakos are often done by road from SOT & Changanwe.
Of course the pipeline is not a road with branches in every direction hence product has to be moved by road. However the pipeline moves AGO at te rate of 550M3 per hour. That means you will need to offload 18 trailers in an hour to match the pipeline. This is impossible hence you can not compare the pipeline to road transport. Additionally the pilepile is about 50cts per litre cheaper than road. When you add transport losses, theft and adulteration in road transport, the pipeline wins hands-down
Yes & No.
1) For deliveries to coastal locations either KPC/KOSF or SOT would be fine.
2) Deliveries equidistant from off-take points would be OK i.e. why pump to Nairobi then deliver 'backwards' to Mtito Andei vs using trucks to deliver straight to Voi from SOT/KOSF.
3) Due to off-take delays etc in Nairobi, some prefer road deliveries to all town east of Machakos
So you do admit that KPC allocated unfair ullage to Triton [u say KPC but I think you meant Triton]. Seems a clear-cut case of wrongdoing by KPC regardless of all the rest.
Considering that there was no stated way of sharing ullage, it will not be right to say that KPC were unfair. let the courts decide whether KPC breached the agreement with KK. An agreement that does not guarantee ullage. However, common sense disagrees with KPC's ullage allocation to Triton.
I believe KK over KPC execs. As you say, let the court/s decide. Pity it will take much longer as the lawyer fight it out! BTW, I am learning from this exchange. Thanks. In addition, I do have a non-KK Oil Marketer who answers some of my queries. Seems he prefers a TRANSPARENT entity as a middleman i.e. the space/ullage allocation by KPC should be independently verified. The unfortunate casualty from Triton's collapse was the abandoned storage tanks they were building. It's a pity a trader/speculator like Vitol won the auction vs a Kenyan OMC consortium. Finally, am I biased? Maybe... I own 1/40,000,000 of KPC but probably 100x that of KK. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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BTW, did KPC deposit the KES 4.6bn into a joint account as ordered by the Court? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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Who is picking up KK? A couple of a million-share trades GOD BLESS YOUR LIFE
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Rank: Chief Joined: 3/24/2010 Posts: 6,779 Location: Black Africa
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milken, VVS: Would you happen to know the breakdown of KK's service stations by province? GOD BLESS YOUR LIFE
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Rank: Member Joined: 4/14/2010 Posts: 806 Location: Nairobi
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Just been following the discussion and coupling with my little knowledge about the oil industry, I would like to (agree with @milken) and say that it would not have been logical for KPC to guarantee KK exclusive use of the facilities...simply because it is a multi-user facility (ie any oil company has a right to use the facility). The question then that remains is the validdity of the Transport and storage agreement clause purporting to give KK a right which in itself was not possible to assign. On this point the charge acgainst KPC should have failed as you can not purport to give something that from the start you cant(it was not set up to do). There has been lots of claims about preference to some other company. The counter argument which I think is proveable is that the other company that got more ullage allocation was having industry material ie was not allocated ullage as the company for own use/sale but to hold the industry material as it waits for the industry players to pay up and take 'delivery' of their share. It is the inability of KPC to demonstrate this clearly coupled with a misguided report by one audit firm that is leading to the perpetuation of this incorrect position. On issues of loss of financial goodwill, marketing costs etc. these are largely difficult to quantify, especially if the financials( profit, sales) are not directly attributed to the event. To summarise, KK's case against KPC should not have stood. But it will stand simply because the KPC never wins cases (based on history and other factors). Now....please dont kill the messenger! 
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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@winston - I am sending Rambo to see you... ;-) BTW, if KPC did not have the ability to enter into the Agreement then it (or officers) committed FRAUD if done with the knowledge they did have the ability to offer such an Agreement... Based on the above, KK has Locus Standi to ask KPC for compensation since KK made business decisions based on the Agreement. As far as the loss of financial goodwill, marketing costs, etc: 1) There were demurrage costs for the vessel/s 2) There are financing costs The others might be 'vague' but in KK's defense, they are in the business of importing & selling fuel. They have the numbers to back up the losses they suffered... Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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winston wrote:Just been following the discussion and coupling with my little knowledge about the oil industry, I would like to (agree with @milken) and say that it would not have been logical for KPC to guarantee KK exclusive use of the facilities...simply because it is a multi-user facility (ie any oil company has a right to use the facility) KK did not want (or have) 'exclusive use' but under the Ullage Agreement/s all OMCs are given an 'allocation' based on Market Share. There are rules about evacuation as well therefore, KPC should have availed that percentage to KK. What probably happened is that Triton bribed some KPC chaps who allowed Triton to use KPC/KOSF tanks as STORAGE [above their ullage allocation] exceeding 30 days thus denying others the chance to use it to offload fuel. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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