Kenya National Petroleum Corporation (KNOC) has failed to account for 149,773 LPG cylinders as well as barbecues and stoves purchased by the Ministry of Petroleum and Mining for distribution to low-income households.
State oil marketing warehouse records showed stocks of 161,448 6kg cylinders, but only 11,675 6kg cylinders were included in the financial statements as of the end of June 2023.
Auditor General Nancy Gathongo’s report showed that Nok’s stocks consisted of 161,448 6kg cylinders, of which 5,444 were filled with gas, 329,303 stoves, 330,115 6kg grills, 60,000 HP tubes and 84,499 double burner stoves.
But as of June 30, 2023, Ms Gathongo said only 11,675 6kg cylinders, 12,869 stoves and 87,147 barbecues with a total value of Sh20,501,191 were included in the companies’ financial statements.
“The remaining items were not included in Nok’s financial statements, a position the management attributed to the lack of official authority from the Ministry of Petroleum and Mining to transfer ownership of the items to the company,” she said.
The department also noted that 22 stoves were said to have been collected as samples by the Kenya Bureau of Standards and the Directorate of Criminal Investigations in 2018 and 2019 respectively but were not supported by any documentary evidence.
Ms. Gathongo said that the review of records and physical verification revealed that the 6kg cylinders purchased in the first unit and the two-burner low pressure cooking ovens purchased in the second unit of the project with their accessories had not yet been distributed and were lying in warehouses.
She pointed out that there is a state of uncertainty in the implementation of the project due to the lack of sufficient working capital.
“Under these circumstances, it was not possible to ascertain the amount of money spent on the project.”
Ms Gathongo also raised questions about 105,838 defective cylinders worth Sh190,812,991 stored at the company’s Nairobi National Terminal.
She said the administration had not taken action on the defective cylinders, given that their numbers had been increasing over the years.
“Under these circumstances, the amount of money spent on the defective cylinders, which amounted to Sh190,812,991, cannot be confirmed,” Ms Gathongo said.
The Ministry of Petroleum and Mining has delegated the responsibility of implementing the Mwananchi Gas Project to the company on behalf of the national government through a letter dated September 16, 2021.
The project aimed to promote the use of modern cooking fuels among low-income households and involved the distribution of subsidized LPG cylinders, grills and stoves purchased by the Ministry of Petroleum and Mining.
Ms. Gathongo said that according to the ministry, the money generated from the sales will be used to purchase additional gas.
She said the pilot programme to launch the project was expected to start during the 2020/2021 financial year but the company lacked sufficient working capital to purchase LPG for use in filling cylinders.
The government was to establish storage facilities for cylinders at local distribution points to facilitate access to them by beneficiaries.
The government launched a Sh3 billion cheap cooking gas scheme in October 2016 with the aim of containing forest destruction by reducing the use of charcoal, firewood and kerosene as fuel.
The Ministry of Petroleum had planned to purchase five million 6kg gas cylinders at a subsidised price of Sh2,000, targeting low-income households.
The project was to be implemented in two phases, with the first unit involving the distribution of 6kg filled, subsidized cylinders equipped with a grill and stove as a pilot project in 11 electoral districts within Nairobi.
The second unit included dispensing 6 kg filled cylinders using a smart meter, a horsepower tube and two low burners.
But a technology company called Atene Enterprise Solutions has filed a lawsuit against Nok to terminate its contract to provide an online payments platform for subsidized gas beneficiaries.
The project was also delayed after the ministry hired an independent inspector following safety concerns raised by consumers who found the cylinders to be defective.
The project was suspended in 2019 after the Criminal Investigation Department began investigations into how fraudulent contractors supplied thousands of faulty gas cylinders.
