KenolKobil Notifies Kenya Petroleum Refineries on Arbitration Proceedings

KenolKobil Ltd., a Kenyan fuel retailer, said it informed Kenya Petroleum Refineries Ltd. that it is seeking arbitration through British courts in a long- running dispute between the two companies over processing fees.

“KPRL has refused to go into arbitration in a court in Kenya, so we made a submission to the court in England,” Charles Njogu, a spokesman for the Nairobi-based company, said in a mobile-phone interview today. “Our processing agreement with KPRL is based on the Arbitration Act of England.”

KenolKobil said last month it is in “high-level” talks to resolve a four-year dispute with KPRL over the fees. KenolKobil is seeking arbitration to review increases that KPRL introduced in 2006 and 2008, which it has refused to pay.

KPRL says it is owed 600 million shillings ($7.4 million) for non-payment by KenolKobil, which in turn says it is owed 5.3 billion shillings as a result of losses incurred after KPRL withheld refined oil and prevented two ships from delivering crude ordered by KenolKobil.

KenolKobil, which has 25 percent market share in the East African nation, has operations in six African countries outside Kenya, including Ethiopia, Tanzania, Uganda and Zambia.

KPRL is jointly owned by Kenya’s government and Essar Energy Overseas Ltd., a unit of Port Louis, Mauritius-based Essar Energy Plc. KPRL Chief Executive Officer Raj Varma wasn’t available for comment when Bloomberg News called the company’s headquarters in Mombasa outside normal business hours seeking comment.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

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