Petroleum firm Proto Energy has suffered a setback after the High Court dismissed its claim of up to Sh5.6 billion from rival companies.
In a ruling delivered earlier this week, the High Court declined the application by the oil company to bar the Energy and Petroleum Regulatory Authority (Epra) from licensing rivals Hashi Energy, Lake Gas, and Lake Oil over a deal gone bad.
According to court documents, Proto Energy alleged it extended Sh87 million credit facilities to Lake Gas after transferring its cylinder deposit to the firm in August 2019.
“Further, that pursuant to the said agreement, it also incurred storage expenses in storing cylinders of the first interested party to the tune of Sh2.7 billion as of August 4, 2020, whose storage charges continue to accrue,” said Proto Energy in the court papers.
The cylinder exchange pool was set up by the marketers in 2012 to allow consumers to refill cooking gas cylinders from any brand that is a party to the agreement.
Proto Energy further argued that Lake Oil has taken over the filling, marketing and distribution of its gas cylinders in an attempt to skirt its debt obligations.
It was seeking to have Epra stopped from licensing or renewing the operating licence for Lake Gas and Lake Oil.
The two companies, however, denied owing any money, saying the cylinder exchange pool system provides for the exchange cylinders for cylinders and not for money as argued by Proto Energy.
“That it is malicious and contrary to the exchange pools instruments of operations for the applicant to hoard their cylinders and claim storage charges, and is only meant to affect the interested parties’ LPG market,” said the firms in responding submissions.
Proto Energy had also filed a similar suit against Hashi Energy, citing violation of the same agreement and is claiming a total of Sh2.9 billion.
According to court documents, Proto Energy alleged that Hashi Energy owed it Sh4.1 million for delivery of cylinders under the LPG Cylinder Exchange Pool as of August 4, 2019.
“Further, that the applicant was also owed Sh2.9 billion by the Interested Party in unpaid storage charges and extended credit facilities by transfer of its cylinder deposit to the interested party in the amount of Sh91 million,” said Proto Energy in its submissions to the court in part.
In her ruling dismissing the two cases, Justice Pauline Nyamweya said Proto Energy had failed to demonstrate an arguable case and its application was, therefore, unmerited.
The cylinder exchange pool was scrapped in 2019 after 10 years by amendments to the Energy (Liquefied Petroleum Gas) Regulations of 2009.
This came after marketers gave the scheme a wide berth, preferring to manage their value chains.
Proto Energy Limited under which Pro Gas is sold, a subsidiary of Africa Gas and Oil (AGOL) which is owned by Mombasa businessman Mohammed Jaffer an influential figure known to have the muscles to dominate any market that he ventures into, it comes as no surprise that he made such an application to kick out competitors in order to remain a sole player in the industry which by all standards he currently dominates.
Details on how Mombasa billionaire Jaffer Mohammed controlled the lucrative gas industry have are not shocking but what that is shocking is how he manages to escape responsibility despite using intimidation, police and various government agencies involved in the management of gas and cylinders supplies across the country as his tools to harass competitors and others.
Mohammed Jaffer became rich by associating himself with the late dictator Daniel Arap Moi and was one of the key financiers of the late president. To reciprocate, Jaffer was handed the lucrative business of establishing Grain Bulk Handlers at the port of Mombasa. The firm enjoys the monopoly of handling imported grains at the port including maize hence making his name to make a cameo appearance when the topic of underworld business dealings is ignited.
Back to gas industry wars, Jaffer using his connections in political circles operates African Gas Oil Limited. The firm imports gas in bulk shipment with storage facilities in Mombasa.
Agol’s main core business is to import gas and dispatch to industry players on wholesale. The wholesalers are then supposed to distribute across the country.
However, Jaffer who now boasts to have divorced deputy president William Ruto camp in Uhuru Kenyatta succession race claims to enjoy the support of Raila Odinga.
It is imperative to note, for years, the Odinga family has had vested interests in the gas industry trading as East African Spectre. The company manufactures liquid petroleum gas cylinders. The Odinga firm started trading as Erection Ltd but later changed to East African Spectre.
Jaffer in order to monopolise the industry has another sister firm Pro- Gas that now deals in retailing gas as Agol wholesales.
Industry players have always expressed their bitterness that Pro-Gas is favoured thus slowly knocking out other forces in supplies hence recent demands for action.
Jaffer intimidates every investor in the gas industry as he boasts to have members of Judiciary on his payroll and state security operatives. He is reputed to be close to high ranking judges in the judiciary including Court of Appeal judge Alnasir Visram. So strong is his influence that one of his sons is employed at the Court of Appeal.
It is the reason Jaffer wins a majority of cases filed against him or any of his firms; be it a demand by KRA for back taxes or against Kenya Railways whose huge tracts of land around the port of Mombasa GBHL has irregularly used to secure bank loans amounting to a staggering Sh45 billion.
His firm Pro-Gas like many other big dishonest businesses, has been entangled in tax evasion battles with KRA. Jaffers other businesses have also had a long history with tax evasion.
One state agency Jaffer family boasts to control is EPRA, formerly Energy and Petroleum Regulatory Commission.
Epra works for Jaffer’s lucrative investments that enable him have an advantage in controlling gas prices, importation and gas intake in Kenya.
In gas cylinders crackdown, those targeted are accused of selling insecure cylinders to members of the public, thus endangering lives.
Involved in the crackdown are counterfeit agencies among them Kebs.
But one may ask, why target gas cylinders in the crackdown? According to industry players, Kenya has six million households depending on the gas. Key players in the industry Kobil, Total, Shell and Pro-Gas want to trade with own trade mark cylinders while small scale firms in retain want free trade.
Having manipulated to have Energy Act in their favour, the big boys who own the cylinders are slowly knocking out small players.
In the energy Act, if a small player is found retailing gas in cylinders owned by big boys, they are arrested, charged with a fine of Sh10 million if found guilty. They are charged with filling and hoarding gas in illegal cylinders. Other charges involve safety. The act stipulates that safety belongs to the brand owner hence the monopoly by big brothers.
With Jaffer family monopolising the gas industry, fear is now that he can decide to create an artificial gas shortage that will have a great impact on the economy.
Power corrupts, extreme power corrupts extremely.
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