Kenya lost more than Sh6.6 billion in the edible oil programme initiated by the government to bring down the cost of the commodity. Top officials of the Kenya National Trading Company (KNTC) admitted before members of the Senate Trade, Industrialisation and Tourism, chaired by Seki Lenku Ole Kanar, that while they spent Sh 14.4 billion to import cooking oil, they had to sell it at a lower price.

Among the companies that imported the oil were Multi Commerce FZC, which was paid $69,894,300 (Sh11.18 billion) to bring in 1.97 million jerricans; Charma Holdings Limited (499,174 jerricans for $14,976,720); and Shehena Holdings (13,420 jerricans for $402,600).

Lower price

The corporation lost money because it not only sold the oil at a lower price but also due to fluctuations in the dollar exchange rate ($160 to the shilling to now $130), said KNTC acting Managing Director Peter Njoroge.

Njoroge blamed the loss on the previous management of the organisation, saying they had made several mistakes that led to taxpayers losing over Sh6 billion.

He said: “It’s unfortunate that this happened. It’s not a good thing and as part of the KNTC management, we owe this country an apology.

“Moving forward, we have learnt our lesson and those who will be moving this organisation to the next stage will use the lesson and will not make the same mistakes.”

He added that procuring the cooking oil in US dollars “was unfortunate”. “However, progressively the board has guided that future procurement should be done in Kenyan shillings. The board has haltered the importation,” he added.

To make a profit, KNTC should have sold each jerrican of oil for Sh4,813 and not Sh3,700 as was the case here, said Purity Kimathi, the corporation’s general manager for finance and business development.

“It’s unfortunate this happened and we take responsibility for the mishandling,” she said.

She added: “There were many overheads arising from foreign exchange losses, clearance of the commodity and housing charges. Yes, this could have caused the loss of Sh 6.6 billion.”

Apart from the Sh6.6 billion lost, senators were equally shocked to learn that a recent sale of uncleared jerricans at the port to a company called Enviro Pro Kenya Ltd to have it reshipped back to the country of origin was also made at a loss.

Not taxed

The uncleared jerricans were owned by the three companies – Multi Commerce, Charma and Shehena – that shipped in the oil on behalf of KNTC.

Documents presented to the committee showed that a total of 797,574 uncleared 20-litre jerricans were sold to Enviro Pro Kenya for Sh3,028 per jerrican, translating to Sh2.4 billion.

The sale to Enviro Pro Kenya – owned by Nicholas Mathenge, Tervin Charlo and Abdikadir Ali – resulted in a loss of about Sh500 million, as KNTC sold the same jerrican of oil to Kenyans for Sh3,700.

But Njoroge explained to senators that KNTC sold the commodity at a lower price because it was not subjected to taxation, unlike what was sold to Kenyans.

KNTC sold the oil to have it reshipped to the country of origin because it was to expire in May next year and thus had to be on shop shelves six months before that for it to be fit for consumption.

He said: “What we spent at Sh 3,700 was inclusive of the Value Added Tax (VAT), but on this customer, we were able to sell it at that price because we did not pay for VAT.

He added: “The oil was to be sold to try to stabilise the prices, but because it had an expiry period, we had to sell it because we could have ended up losing [it].

“The consignment, however, is yet to be shipped out of this country.”

The admission by KNTC managers drew anger from committee members, who accused the corporation of trying to kill Kenyans by selling substandard oil.

Mohammed Chute (Marsabit), who raised a question about the cooking oil on the floor of the Senate, claimed KNTC was run by “crooks” and action needed to be taken against those behind the mess.

He said: “This organisation is run by criminals and crooks. If the investment was of Sh9 billion and you have lost Sh6 billion, what are you going to tell Kenyans, and yet people who occasioned this are walking around freely?”