KPC Senior Management on the Spot Over Sh292 Million Pipeline Inspection Tender

Senior managers at Kenya Pipeline Company are under mounting pressure after a procurement tribunal ruled that the State corporation unlawfully cancelled a Sh292.9 million tender for the inspection of its critical Mombasa–Nairobi fuel pipeline, exposing what the watchdog described as procedural flaws and weak justification at the highest levels.

In a decision that has sent shockwaves through the energy sector, the Public Procurement Administrative Review Board ordered KPC to reinstate the $2.27 million contract for in-line inspection services on Line 5, a 450-kilometre, 20-inch multi-product pipeline that ferries billions of litres of fuel inland each year.

The Board found that KPC’s termination of the tender was unlawful and procedurally flawed, dismissing claims by the company that there were material governance issues in the bidding documents.

The ruling places senior management, including Managing Director Joe Sang, in the spotlight over what critics say is a pattern of opaque procurement decisions at one of the country’s most strategic State corporations.

At the heart of the dispute is a September 2025 tender for high-resolution intelligent Magnetic Flux Leakage and geometry inspection of the ageing pipeline, a sophisticated integrity assessment designed to detect corrosion, metal loss and structural defects before they escalate into catastrophic leaks.

Eleven firms submitted bids. Strategic Corporate Consultants Limited emerged as the lowest evaluated bidder at $2.27 million, inclusive of taxes. According to documents presented before the tribunal, an initial professional opinion endorsed the award in November.

But in December, the Managing Director rejected the recommendation, citing alleged inconsistencies between subcontracting clauses in the Instructions to Tenderers and mandatory requirements in the bid document.

A subsequent addendum recommended re-tendering, and a second professional opinion in January proposed outright termination. Bidders were then informed that the procurement had been cancelled due to ambiguities that allegedly made a lawful award impossible.

Strategic Corporate Consultants challenged the decision, arguing that KPC had issued clarifications before bid closure and could not retroactively invalidate the process after declaring it the lowest evaluated bidder.

In its ruling, the Board rejected KPC’s argument that Clause 4.4 and Mandatory Requirement No. 13 were contradictory. It held that a wholesome reading of the provisions showed they were complementary. Clause 4.4 permitted non-bidding firms to subcontract across multiple bids, while the mandatory requirement restricted multiple engagements only where the main contractor was foreign.

By cancelling the tender on grounds the Board deemed unsubstantiated, KPC was found to have failed to comply with statutory procurement procedures designed to ensure fairness, transparency and accountability in public spending.

The case unfolds against the backdrop of rising operational stakes for the company. KPC’s throughput volumes rose six per cent in 2024 to over nine million cubic metres, reflecting growing demand for fuel transport along the Northern Corridor.

The integrity of the Mombasa–Nairobi pipeline is therefore not merely technical but central to national energy security and regional trade.

Energy analysts warn that delays in conducting in-line inspection increase operational risk.

Intelligent pigging surveys using Magnetic Flux Leakage tools are globally recognised as a primary safeguard against corrosion-related failures in high-pressure pipelines.

Kenya has in the past suffered costly spills and product losses linked to infrastructure weaknesses, including major leaks in Thange and other sections that triggered environmental damage and compensation claims.

The tribunal’s intervention now raises uncomfortable questions about internal controls at KPC. Was the cancellation a genuine governance concern or a misreading of tender provisions? Why was an endorsed award reversed after evaluation had been completed? And what due diligence did senior management undertake before terminating a multi-million shilling procurement process?

Procurement law specialists note that termination of a tender at such an advanced stage is a serious administrative action that must be backed by clear legal grounds. Where such grounds are absent, it exposes public entities to litigation, reputational damage and delays in critical infrastructure maintenance.

For a State corporation that has in recent years embarked on refinery upgrades, storage expansion and capacity enhancement, the optics are troubling. KPC operates in a capital-intensive sector where investor confidence and lender scrutiny hinge on governance discipline.

The Board’s ruling effectively resets the process and compels the company to proceed in accordance with the law. But the political and managerial consequences may linger far longer.

As Parliament intensifies oversight of State corporations and the Treasury pushes for tighter procurement compliance, the Sh292 million inspection tender could become a test case of whether accountability mechanisms in Kenya’s public sector are finally biting at the top.

For now, the question hanging over KPC’s senior management is stark. In a company entrusted with the arteries of the nation’s fuel supply, how did a routine integrity inspection contract spiral into a procurement debacle now etched into the public record.