@VVS you are getting angry for nothing. Here we are talking about KK and KPRL not moism and KANUism. Furthermore, Kaptagat Tea Factory is still inside the Mau, project kamwana is
the president.

Back to KK. In the long run, a business that changes its main line of business from selling commodity xyz to seeking compensation from the government, will just end up been frustated by the system till it dances to the tune or terminates its operations.

Just advice your senge-man to stick to selling petroleum products.

A little more info:

Most (if not all OMCs) have refused to use KPRL as a refiner after 30th June 2013. The refinery will not have clients yet they owe 7bn (or more) to the OMCs according to Deloitte. As expected, KPRL has rejected the findings of the report.

KK took the Shs 1.2bn in product as an offset against the Shs 3.1bn. So KK needs to wait another 19 days & then the KPRL issue goes away i.e. they need not buy from KPRL. KK will be short Shs 1.9bn but they have gone to court to demand that amount.

In the meantime, KK can use Shimanzi to import what they need. They can also pay other OMCs for hospitality agreements & buy products from other OMCs at a fee. KK will have to shift exports to EAC away from Kenya to Tanzania but with the new Terminal in Dar that is not a problem.

So exports to Rwanda & parts of Uganda can be supplied via Dar not Mombasa. Eastern Uganda (supplied through Kenya) is a tough market for them due to untaxed imports so it might not be bothered.

That leaves Kenya where KK's market share will drop but the profitability can increase when it doesn't have to buy from KPRL. And this matter will come to a head in 19 days. The big question is whether KK will go dry in 19 days?

“All marketers have not signed the off-take agreements for next month,” said a chief executive of one of the major nine companies that control 86.4 per cent share

Oil Industry Supply Coordination Committee, wrote a joint letter to the Government demanding efficiencies at the refinery. They also demanded compensation of Sh7 billion arising from operational inefficiencies at the facility following an audit report by Deloitte that has nonetheless been disowned by KPRL.

“The costs get even higher as Kenya Revenue Authority only manages to honour Sh12 billion out of (an estimated) Sh19 billion in VAT refunds,” said another CEO.

On May 21, for instance, over 96,000 of the 233,000 cubic meters of fuel at Kenya Pipeline Company’s storage facility at Kipevu was found to have been lying there for more than 21 days. “Why license firms when they don’t have evacuation capacity.”

Why is it that no actual figures were provided to show the return to profitability? The industry is yet to recover, even Total Kenya have not announced their 1Q. More information needs to be provided.

@h2s, it’s sad that these firms are not giving us quarterly reports. ... @mwanahisa has recently pointed that Total (which used to release quarterly results) has since given notice that they will no longer be releasing quarterly results. #Very_Sad_for_Investors

Those with Insider knowledge know KPRL is between a hard place and a rock. Deloitte is KPRL's auditor and I believe they all signed a document committing them to the findings of the Forensic audit of yield shifts. Certainly even Nyoike who was the Head master and largest cheer leader of KPRL already admitted. We are looking at KPRL being shut for a few months. This is certainly what OMC are angling for. It operates, they will want to be paid 7B else no point pushing product through the a 'mkebe' refinery. Certainly if nobody blinks we will have a fuel shortage at end month, and I know this is what these OMC's are angling for.

Is the audit out to the public?

CMA wanalala. If a firm issues quarterly results then it should be consistent. Unfortunately, in Kenya, it seems the CMA has no clue.

OMCs have said KPRL is inefficient. If KPRL can survive as a Merchant Refinery without off-take agreements, then let it do so. OMCs should not have any reason to import fuel if the prices from KPRL are the same or lower than imported fuel. Of course, KPRL can pay up the Shs 7bn & make the problem go away...

@vvs, omera, KPRL can't even pay 1B bwana! Those Essar guys are too broke. I am sure they are waiting for break up value of the refinery because government doesn't trust them to invest tax payers money. At least Orange puts in money and cons government!

By CONSTANT MUNDA
ESSAR Oil has indicated it will not allow Kenya Petroleum Refineries Ltd (KPRL) closed before it fully recovers its investment in the facility. KPRL chief executive Brij Bansal said the firm has yet to recover its “huge” investment. When it bought the 50 per cent stake from Shell, Chevron and BP in July 2009, Essar did not disclose the transaction amount.

The firm, however, disclosed the deal included a plan to pump in between $400 and 450 million(Sh3.4 to Sh3.83 billion) to upgrade the facility. The other partner – the government – has been largely mum over the push to close the 53-year old refinery although the regulator, Energy Regulatory Commission (ERC), has said the facility was a burden to consumers.

ERC has indirectly supported oil marketers’ push to turn the refinery into a strategic oil reserve. Long overdue Its recent damning assessment has shown that refined fuel imports were at least Sh5.83 billion ($68.6 million) cheaper than fuel processed at the facility.

Oil industry corporate chiefs have argued an oil reserve was long overdue to hedge against market fluctuations – the effect of which is a major threat to the stability of an economy dependent on petroleum products by more than 80 per cent.

“An economy of the size of Kenya that serves the region needs to have a reserve,” said a CEO of a major oil company who declined to be named. “We certainly need a refinery in future when we have our own oil but right now it’s better if it’s changed to a storage facility,” the source said.

The growing talk of a strategic reserve is, however, not new. In June 2010, the then ministry of Energy had publicly announced plans to set up a reserve that could hold fuel that can last the country three months.

KPRL top management, however, reads sabotage in the new push. The People has learnt oil marketers have not signed uptake agreements as they protest a rule that requires them to collect 40 percent of their fuel requirements from the facility. “We cannot push oil marketers to collect their stock push,” Bansal told The People.