In an explosive statement Thursday, opposition leader Raila Odinga accused President William Ruto of striking a “corrupt and rotten to the core” oil deal with Middle Eastern countries that has further impoverished Kenya.
Odinga said the arrangement — touted by Ruto in April as a government-to-government agreement for cheaper fuel — was actually a sham made with individual petroleum companies that has led to increased costs for consumers.
“The deal was a scam for which we now demand full disclosure and full accountability,” Odinga said. “It is corrupt and rotten to the core. It is state capture by Ruto and company and a conspiracy against the country.”
Since the deal was signed, the shilling has plunged against the dollar, fuel prices have skyrocketed and neighboring countries have abandoned Kenya’s oil pipeline, complaining of inflated costs, Odinga said.
“Ruto collapsing the country while feeding Kenyans on lullabies,” he said.
Rather than the government-to-government agreement claimed by Ruto, Odinga said Kenya’s energy ministry simply signed a deal with certain Middle Eastern petroleum companies “to shield the three Kenyan companies from paying 30% corporate tax.”
Those companies — Gulf Energy, Galana Oil Kenya and Oryx Energies Kenya — were “hand-picked distributors” but do not pay the corporate tax, Odinga asserted.
“Your guess is as good as mine on who is pocketing the unpaid corporate tax,” he said. “But the burden of the unpaid corporate tax is passed to Kenyans at the pump.”
The opaque deal has increased costs in multiple ways, Odinga charged.
“The hand-picked distributors are selling oil to us at almost twice the price from bulk suppliers,” he said.
Odinga also accused the companies of “manipulating delivery date ranges so that they can maximize on prices,” leaving ships waiting at sea for weeks and incurring demurrage costs billed to consumers.
He said the deal lacks proper safeguards and oversight: “It also lacks flexibility which further exacerbates the pricing model.”
As a result, Uganda announced last week it will no longer purchase fuel via Kenya’s pipeline, complaining of costs inflated by up to 59%.
“The middle men (Ugandan) President Museveni is talking about are Kenya government officials,” Odinga said.
He called for the immediate cancellation of the contract and reinstatement of an open tender system for fuel purchases. Odinga also demanded a corruption probe, surcharging of officials involved, restoration of fuel taxes to 8% from 16%, and the public release of all hidden deal documents.
“The men and women who came up with this self-serving deal must be surcharged and sacked,” Odinga said.
He concluded: “The deal that Ruto signed with the oil companies has excessively high Freights and Premiums compared to those witnessed in Open Tender Systems. They are as high as an additional $50 dollars per metric tonne.”
