NAIROBI, Kenya – The Auditor General has raised the alarm over governance and financial lapses at the Kenya Petroleum Refineries Limited (KPRL), revealing that the company’s chief executive has been serving in an acting capacity for more than four years.
Auditor General Nancy Gathungu, in a report covering the period to June 30, said the appointment contravenes public service laws, regulations, and the Mwongozo Code of Governance for state corporations, which limit acting tenures to six months.
The CEO was first appointed on October 4, 2019, for a 12-month acting term, which has since been renewed annually by the board.
Five other employees have also served in acting roles beyond the legal limit, some for over 30 months, despite a 2020 directive from the Head of Public Service to strictly enforce the six-month ceiling.
“Management was in breach of the public service policies and guidelines,” Gathungu told Parliament.
The audit also flagged irregularities in the secondment of the Chief Operating Officer, who has been stationed at the Petroleum Department since 2017.
His term was extended in 2023, surpassing the six-year maximum period, with no approval from the Public Service Commission provided for verification.
Mounting Financial Strain
The refinery’s financial woes also came under scrutiny. KPRL posted a Sh91 million loss during the review period and has a negative working capital of Sh2.5 billion, raising doubts over its ability to remain solvent without government support and creditor backing.
The report criticised management for failing to disclose this “material uncertainty” in financial statements.
Asset management concerns were also raised. The audit cited Sh1.7 billion worth of assets, including items fully depreciated but still in use, and questioned their valuation at Sh2.3 billion.
In addition, a Sh160 million discrepancy was identified in lease recoveries from Kenya Pipeline Company (KPC), suggesting possible misstatement of income.
Governance Failures
Gathungu said the findings point to systemic governance failures that risk undermining KPRL’s survival.
The refinery, which has faced operational and financial challenges for years, is under pressure to improve transparency and compliance with state corporation regulations.
“The lapses identified underscore the urgent need for reforms at KPRL to safeguard public resources and ensure proper governance,” the report concludes.
