Kenya: Treasury Ordered Supply of Sh143m Oil Irregularly

The National Treasury building in Nairobi (file photo)
29 August 2019

The Treasury irregularly directed the Attorney General's office to source oil worth Sh143,844,069 from the National Oil Corporation (NOC) despite having a valid contract with M/S RH Devani Limited, a parliamentary committee heard Thursday.

Appearing before the Public Accounts Committee (PAC) of the National Assembly, Solicitor-General Ken Ogeto said the Treasury ignored a contract that Devani Limited had with the Transport ministry to supply fuel to government ministries, departments and agencies during the 2016/17 financial year.

"This is the dilemma we had because there already existed a binding agreement with Devani for the supply of oil. A breach of this contract could have cost the government a huge sum of money," Mr Ogeto told the committee chaired by Ugunja MP Opiyo Wandayi.

The State Law Office was at pains to explain why it failed to notify Treasury of the contract and the potential legal redress and attendant costs had the Devani contract been breached.

"Did you notify the Treasury that you already had a valid contract with Devani?" Mr Wandayi posed and asked for documentary proof.

The Transport ministry provided a list of pre-qualified firms to supply the commodity where the government agencies were required to pick one.

The Auditor-General's report on the accounts of the State Law Office for the financial year 2016/17 questions why it ignored a government directive that all fuel be procured from NOC.

"During the financial year, the ministry procured all fuel consumed from a local petroleum dealer, contrary to the government directive. It is not clear why government regulations were not followed," the report reads. Mr Ogeto told the committee.

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