Uncovering Corruption in Kenya's Oil Deal: High Costs and Lost Revenue

Economy Resource Management

The recent government-to-government oil deal in Kenya has been marred by corruption, leading to high costs for consumers and lost revenue for the government. The deal has also caused landlocked countries to abandon the pipeline due to high costs and has led to a decrease in business for Kenya Petroleum Company (KPC).

Corruption and High Costs

⚠️The deal was characterized as G2G (government-to-government) to avoid corporate tax for Kenyan companies.

⚠️The cost of oil has not decreased and the Kenyan shilling has fallen against the dollar since the deal was signed.

⚠️Landlocked countries dependent on Kenya for oil are abandoning the pipeline due to high costs.

⚠️Companies buy oil at low prices and delay discharging it before selling it at higher prices.

⚠️Some companies charge higher prices and deliver more oil than contracted, forcing consumers to buy more at inflated prices.

Impact on KPC and Government Revenue

⛽The corruption involved in the deal prevented Ugandan oil marketers from participating in sourcing petroleum products through the northern corridor.

⛽KPC is set to lose substantial business to Tanzania as Uganda shifts to the central corridor.

⛽The deal signed by KPC with oil companies has high fees and premiums compared to open tender systems, leading to job losses and loss of revenue for the government.

⛽The Ministry of Energy and Petroleum should make public the Supply Purchase Agreement it signed with the oil companies.

⛽The Director of Criminal Investigations should investigate the tax compliance status and pricing model of the three oil companies.

FAQ

What led to landlocked countries abandoning the pipeline?

High costs of oil products in Kenya.

What is the impact of the deal on KPC?

KPC is set to lose substantial business to Tanzania as Uganda shifts to the central corridor.

What should the Ministry of Energy and Petroleum do?

Make public the Supply Purchase Agreement it signed with the oil companies.

Who should investigate the tax compliance status and pricing model of the oil companies?

The Director of Criminal Investigations.

What is the need for a comprehensive brief on Uganda's pursuit of petroleum needs?

To understand its implications for Kenya.

Summary with Timestamps

🔴 0:30The Kenyan government did not sign a contract with Saudi Arabia or the United Arab Emirates, but only the ministry of energy and petroleum signed a deal with state-owned petroleum companies in the Middle East.

📈 4:35Companies are using a shady business model to buy oil at low prices and sell it at higher prices, passing the cost onto consumers.

💰 9:09Tanzania reduces petroleum product prices due to decrease in world oil prices, while Kenya's prices remain the same.

🛢️ 13:28Uganda's shift to the central corridor for sourcing petroleum products is causing Kenya Pipeline Company (KPC) to lose business, resulting in higher prices and job losses.

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