Raila Odinga Exposes Irregularities in Kenya’s Oil Procurement

raila odinga exposes irregularities in kenyas oil procurement
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Renowned Kenyan politician Raila Odinga has released a statement, raising serious allegations against the Kenyan government, particularly concerning the oil deal signed with Saudi Arabia and the United Arab Emirates. Odinga’s statement, dated November 16, 2023, highlights significant discrepancies in the deal, pointing to corruption, inefficiency, and a lack of transparency.

In April of the same year, Deputy President William Ruto announced a Government-to-Government Memorandum of Understanding for oil supply to Kenya, claiming a groundbreaking achievement in stabilizing fuel prices and positively impacting the exchange rate. However, Raila Odinga disputes these claims and presents five undeniable facts:

  1. False Government-to-Government Characterization:
    • There was no actual Government-to-Government (G-to-G) agreement. The Ministry of Energy and Petroleum signed a deal with state-owned petroleum companies in the Middle East. Odinga asserts that characterizing the deal as G-to-G was a ploy to shield three Kenyan companies from paying 30% corporate tax.
  2. Unchanged Fuel Costs and Falling Shilling:
    • Despite the deal’s promises, the cost of oil has not decreased, and the Kenyan shilling has continued to fall against the dollar.
  3. Continued Scarcity of the Dollar:
    • The scarcity of the dollar has persisted, contradicting Ruto’s assurances of improved access to foreign currency.
  4. Declining Northern Corridor Transit Route Usage:
    • Landlocked countries dependent on Kenya for oil are exploring alternative routes, abandoning the Northern Corridor Transit Route due to increased costs.
  5. No Relief for Exchange Rates:
    • Contrary to Ruto’s prediction of an improved exchange rate, the Kenyan shilling has depreciated further against the dollar.

Odinga describes the deal as corrupt, rotten, and a conspiracy against the country, alleging that it was designed to keep oil prices high and benefit a select few. He calls for full disclosure and accountability, challenging Ruto to make the Supplier Purchase Agreement between Middle East oil firms and Kenyan distributors public.

He further accuses selected distributors, including Gulf Energy, Galana Oil Kenya Ltd, and Oryx Energies Kenya Limited, of selling oil to consumers at almost twice the price from bulk suppliers. Odinga asserts that these companies manipulate delivery dates to maximize prices, and the Ministry is changing billing months to allow for higher pricing.

The deal has led to increased demurrage costs, with ships queuing at sea for up to 18 days, awaiting confirmation of a Letter of Credit. Odinga claims that demurrage costs under the Ruto deal have risen to $70,000 per day, impacting consumers at the pump.

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Additionally, Odinga reveals that Uganda is shifting to the Central Corridor, reducing its reliance on the Northern Corridor Transit Route via Kenya. The change in route will likely result in the Kenya Pipeline Company losing significant business, leading to higher tariffs and increased costs for consumers.

Odinga’s stand on the matter includes immediate cancellation of the contract and a return to the Open Tender System, which ensures guaranteed supply, accountability, and competitive pricing. He calls for the involvement of the Ethics and Anti-Corruption Commission to investigate the deal, surcharge and sack those responsible, and restore taxes to 8% from the current 16%.

Finally, Odinga demands the public release of the MoU between Kenya and Saudi Arabia and the United Arab Emirates, as well as the Supplier Purchase Agreement and other pertinent documents. He urges thorough investigations into the tax compliance status and pricing model of the involved oil companies, emphasizing the need for transparency and accountability.

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