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A storm is brewing at the Mombasa port after a mystery vessel was cleared to offload 30,000 metric tonnes of fuel on New Year’s eve.

Documents in our possession show that the vessel, M/T Jag Prerana, was allowed to offload the fuel, worth billions of shillings, by officials from the Ministry of Petroleum following a request from oil marketer Gulf Energy despite the fact that it was not among the firms prequalified to bring in the commodity.

An email from the ministry, dated December 30, 2021, directed that the vessel be allowed to offload its cargo while the marketer effected payment of the requisite taxes as the government was “in need of the money.”

“In view of no objections on proposals, kindly proceed to berth it at the Kipevu Oil Terminal and expedite the discharge process.

In the interim, please commence to pay today equivalent taxes and products cost to access product as soon as outturn is out.

Government is in need of this money,” read an email from the Chief Economist at the ministry, Joseph Wafula.

The email was in response to a letter from one Charles Nyakundi of Gulf Energy, who had written to the ministry and the Kenya Pipeline Company (KPC) seeking clearance for the cargo to be offloaded.

Bridge gap

“Further to VSM deliberations on the PMS top up to bridge the gap and avoid possible stock out, the vessel delivering the parcel is M/T Jag Prerana with 30,000 metric tonnes on board.

Vessel is ready in all respect to discharge this cargo,” Nyakundi had stated in a letter sent on the same day.

KPC head of logistics James Karanja also gave his consent for the fuel to be offloaded.

“Whereas KPC confirms having sufficient ullage to receive the said MSP cargo, it is imperative to complete the discharge ASAP.”

The move has triggered an outcry from small players in the oil sector, who have written to various Government agencies protesting that the vessel that offloaded the cargo had not been prequalified and did not participate in the tendering process to ensure, among other things, safety issues are followed.

Aggrieved marketers claim they are set to incur huge losses since “the big players” in the sector are allowed to circumvent the process, adversely affecting their supply.

Marketers, in a letter to the Petroleum and Mining Principal Secretary Andrew Kamau dated December 31, 2021, protested the ministry’s decision to allow the vessel to discharge its cargo without their knowledge.

“We note with great concern the illegal importation of 30,000MT of Gasoline by Gulf Energy Limited for an “elite” group of oil marketers without knowledge of the all other OMCs,” Oils Marketers Association of Kenya chairman Abdi Ali Salaad wrote.

“We wish to further note that the timing of both arrival and discharge of the cargo is not only suspect but was meant to never have been found out due to the festivities, unfortunately this has been discovered,” the letter.

Marketers argue that the Petroleum Act, 2019, outlaws all private imports for refined petroleum products into the country.

“As the custodian of the Open Tender System document, we believe that the ministry should continue protecting authority of the document,” Salaad wrote.

“Allowing such imports undermines the document and can easily lead to acrimony in the oil industry,” he added.

The letter was copied to the Ethics and Anti-Corruption Commission, Directorate of Criminal Investigations, Energy and Petroleum Regulatory Authority (EPRA), Kenya Pipeline Company and the managing director of Total Kenya.

Legal redress

They want the agencies to investigate and establish how the cargo was tendered for, and if so, through which medium it was tendered that all members did not get to know about it nor got an opportunity to participate in sharing of the cargo.

They also want to know how Gulf Energy Limited considered to deliver the cargo without going through the normal tender process. 

“Who are the beneficiaries of the cargo? The vessel that should be discharging currently is MT Sloane Square delivering Gasoil, and is now sitting outside while demurrage is accumulating,” said the marketers.

They threatened to seek legal redress in the courts if the decision is not rescinded.

 “With this recklessness we are left with no choice other than to institute a legal suit to all the concerned parties,” the letter.

They charged the ministry, KPC and EPRA to ensure the cargo is shared to all OMCs using the usual ullage formula.

“EPRA should not allow demurrage related to the next four vessels that have already arrived at the port to be passed to the Kenyan consumers,” added the letter.