Confusion mars Sh4.6bn court award to KenolKobil
BY RAWLINGS OTINI AND JOHN GACHIRI
Confusion has gripped the award of Sh4.6 billion to KenolKobil after Kenya Pipeline Company (KPC) said it would not pay the money as the oil marketer warned that it would repossess the pipeline’s property after tomorrow. Lady Justice Philomena Mwilu, in a ruling delivered on January 28, said the proceedings would be temporarily halted to allow KPC deposit in court an equivalent of the lump sum awarded to the oil marketer by an arbitrator. This followed a dispute over a transportation and storage agreement the marketer had signed with KPC. The judge ordered KPC to deposit the funds in a reputable and interest-earning bankand in the joint names of both KenolKobil and KPC advocateswithin 14 days. Yesterday, KenolKobil through its lawyers asked KPC to facilitate the transfer of the funds to a joint account before the lapse of the deadline today. “The 14 days expire on Thursday February 10th 2011. It is therefore necessary and urgent that we open the joint account before then,” Kenol’s lawyers, Sharpley Barret wrote to KPC’s lawyers, Ochieng, Onyango, Kibet & Ohanga Advocates. “We are instructed to notify your client, which we hereby do, of our client’s intention to effect execution promptly on expiration of the said period of 14 days, if the full amount will not have been deposited in accordance with the orders of the High Court.” Fresh tussle But KPC lawyers John Ohaga yesterday told the Business Daily the money will not be paid, setting the stage for a protracted legal battle between the two protagonists. “The Sh4.6 billion will not be paid since we will not allow them (KenolKobil) to extort. No way,” said Mr Ohaga. “KPC is a public company expending public monies in discharging its statutory duties and a requirement for it to make such large deposits imposed by the court would severely undermine the firm’s ability to effectively fulfil its core mandate,” said Mr Ohaga on Tuesday. On December 10, 2009, arbitrator Ahmednasir Abdullahi, ordered KPC to pay KenolKobil Sh4.6 billion for breach of contract. Mr Abdullahi said the award was damages for loss of consumer and financial goodwill, cost of public relations and marketing campaign. He ruled that the corporation breached the transportation and storage agreement by allowing the collapsed Triton Petroleum to use its facility, at Kipevu in Mombasa, as a warehouse. Yesterday, at the Nairobi Stock Exchange, the KenolKobil share reacted little to the news of the award as it stood at Sh9.80 compared to Tuesday’s closing price of Sh9.80. “The market is still waiting for the final results of the ruling,” said Deris Mugoi, an analyst at Standard Investment Bank. “KenolKobil’s share price has been paralysed at Sh9.90-Sh9.80 levels since the beginning of the year, but it has traded heavy volumes.”
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