The under-dealings of collapsed Triton Oil Company in Kenya have returned to haunt shareholders of largest oil marketer by market share, Total Kenya.
The oil marketer has notified its shareholders through Nairobi Securities Exchange its full year profits for 2012 could be “materially lower” by at least 25 percent compared with corresponding performance in 2011.
The dip was primarily tied to a legal tussle with Triton in impending proceedings in London Courts.
Total has been entangled in a $12.247 million (Sh 1.053 billion) commercial dispute with the collapsed company owned by fugitive Yagnesh Devani dating back to 2009.
At the time, the fallen Triton was the holder of the envious oil import deal, usually granted through Open Tendering System (OTC), that requires all the other players to buy the commodity from the holder.
Through the OTC, Triton could sell oil to Total, prepare an invoice, have it certified by the buyer and present it to KCB for payment, according to an investigative account of the CID in 2009.
The legal dispute under litigation stemmed from an alleged payment by KCB to Triton when the latter’s agreement with Total had been allegedly cancelled.
The publicly traded firm had nonetheless acknowledged the pending legal claim in its 2011 annual report but had downplayed it as remote.
The case has since progressed and developed,” Total said Tuesday while denying any liability.
Managing director Alexis Vovk said the claim may result in a substantial settlement before end of this month and that the company was acting in the best interest of the shareholders in procuring a commercial resolution.
“The directors and independent auditors are in agreement that this must be adjusted in 2012 accounts,” he stated. “Consequently, the results for the full year 2012 will be a loss higher than that reported for the same period in 2011.”
In absence of the one-off settlement, Total said it would have returned to profitability in the second half of 2012 after instituting a myriad of corrective measures following its Sh282.8 million ($3.2 million) pretax loss on high cost of funds and price controls in first six months of the year through last June.
The measures included controlling costs and developing non-fuel revenues.
The management is confident that the measures in place will lead to an improved performance in 2013,” Vovk said.
The caution by the oil marketer, largely owned by French Total, came in the wake of another warning by its quoted competitor, KenolKobil, that reported on March 6 that its full year net earnings to last December would dip by up to 25 per cent.
The company blamed the expected drop in profitability on volatile oil prices due to price controls, high financing costs on high interest regime and relatively unstable currencies in the nine countries it operates in.
Total and KenolKobil control the market with a 21.5 and 21.4 percent shareholding, respectively.
The latter’s stake reduced late last year from a commanding 25 percent after ending its fuel price discounts earlier in the year.
Triton was accused of the loss of Sh7.6 billion that international and local financiers invested in oil stocks held in their trust by Kenya Pipeline Company.
The stocks, amounting to 126 million litres, were released to Triton, between November 2007 and November 2008 without due approval from financiers.
KCB together with Eastern and Southern African Trade and Development Bank, placed Triton under receivership after failing to pay debts guaranteed through various debentures.
