How suspicious firm in Mombasa duped World Bank into releasing Sh1.8 billion

A suspicious firm in Mombasa has been caught in the middle of a Liquefied Petroleum Gas (LPG) storage plant that has now stalled under questionable circumstances.

According to sources close to The Informer Media Group, it has been revealed that Mombasa Gas Terminal limited (MGT), oil exploration licence was cancelled two years ago by the government for engaging in speculation.

However, despite the cancellation, MGT went on to secure from International Finance Corporation a total debt of Sh1.8 billion ($15 million) for the construction of a Sh2.8 billion ($23 million)

The sources further revealed how the cash released in June last year was meant to fund the first phase of an LPG bulk import and storage terminal at the Mbaraki creek in Ganjoni, Mombasa.

MGT was to inject Sh0.9 billion as equity into the project which was supposed to have a storage capacity of 22,000 tonnes and a throughput capacity of 400,000 tonnes of LPG per annum.

The LPG plant was an excellent idea given that Kenya imports 90 percent of its LPG needs through one private firm.

While the rest of the imports come from the port of Dar es Salaam, a factor that has consistently contributed to high cooking gas prices.

However, stakeholders raised issues on how Mombasa Gas Terminal got approvals from the National Environment Management Authority (Nema).

The inconsistencies have boiled over and stalled what was a controversial plan from the beginning.

Prior to the conceptualization of the LPG plant, MGT’s parent company, Milio International Limited, which is domiciled in Dubai, had their license cancelled by Petroleum Cabinet Secretary John Munyes for failing to meet its contractual obligations

It is, however, now emerged that the licence issued to the company by Nema had been cancelled on instructions of the National Environment Tribunal (Net) six months before Milio received Sh1.8 billion from the World Bank.

This is after it was discovered that Nema had given the green light to MGT to construct the plant through EIA licence No. NEMA/EIA/PSL/7383 without proof of land where the project was to be set up.

The licence was issued on February 19, 2019.

This is not the first time International Finance Corporation (IFC), the private-sector investment arm of the World Bank, has been entangled in such allegations.

There have been allegations of insider dealings with the Dubai based Milio International firm and its Kenyan subsidiary, Mombasa Gas Terminal (MGT) over the latter’s stalled Sh 2.5billion greenfield liquefied petroleum gas (LPG) terminal in the Port of Mombasa, Kenya, The Informer can reveal.

At the center of claimed external influences controlling the global lender’s decisions on financing preferences is John Hart, the owner of Milio International and majority shareholder of MGT.

In June last year, World Bank through (IFC) approved a $23 (2.5 billion) funding for the project by Mombasa Gas Terminal, a now stalled project.

“From the word go, there was no intention to see the project to fruition. The external influences on the decision to finance and readily availed budget runs deep akin to international economic hit men script. MGT project in Mombasa has since stalled.” Our source revealed.

Interestingly, three years prior to the commencement of the project, IFC had proposed to lend to the company.

As per a previous disclosure, IFC was looking to bring as much as $48 million as debt capital for the company, which had put a project cost of $112 million.

It is not clear if IFC indeed went ahead with the transaction.

Milio has been the main supplier of fuels to the NATO coalition forces in Afghanistan and participated in the development of oil terminals in the Caspian Sea and Black Sea.

MGT’s project site is located at Mbaraki Creek within the Port of Mombasa, on a peninsula between the African Marine Dry Dock and the Mombasa Yacht Club.

The land for the import facility is on the site of African Marine and General Engineering Company Ltd.

The financing was meant to go towards the construction of the first phase of an LPG import and storage terminal.

In its disclosure, IFC says the $23 million project will be financed by an initial loan of $5 million (Sh53.9 million) and $10 million (Sh107.8 million) in additional debt arranged by IFC.

The balance of $8 million (Sh862.7million) is an equity contribution from the sponsor with IFC.

MGT is led by its majority shareholder John Hart, who prides himself as having experience in trading fuel and building and managing oil terminals in Eastern Europe and Central Asia.

MGT is part of Milio International.

The matter has now been picked up by the Directorate of Criminal Investigations (DCI) for further investigations into the said matter.