Identifier
Created
Classification
Origin
06KUWAIT1031
2006-03-25 06:36:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kuwait
Cable title:
KPC GETTING PAID BY SOMO, TRANSPORTERS ARE NOT
how-toVZCZCXRO1586 OO RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK RUEHMOS DE RUEHKU #1031/01 0840636 ZNR UUUUU ZZH O 250636Z MAR 06 FM AMEMBASSY KUWAIT TO RUEHC/SECSTATE WASHDC IMMEDIATE 3657 INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY RUEKJCS/SECDEF WASHINGTON DC PRIORITY RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY RUEATRS/DEPT OF TREASURY WASHDC PRIORITY RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
UNCLAS SECTION 01 OF 02 KUWAIT 001031
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/ARP, NEA/I
LONDON FOR TSOU, PARIS FOR ZEYA
TREASURY FOR BBALDRIDGE, PLANTIER
BAGHDAD FOR LKIMMEL, KTAECKER
E.O. 12958: N/A
TAGS: ECON EPET KCOR MOPS KU IZ
SUBJECT: KPC GETTING PAID BY SOMO, TRANSPORTERS ARE NOT
REF: A. KIMMEL - WERBERG EMAILS 03/22/06
B. ANKARA 01392
C. ANKARA 00775
D. BAGHDAD 00936
E. BAGHDAD 00766
F. BAGHDAD 00750
G. KIRKUK 00046
This cable is sensitive but unclassified; please protect
accordingly. Not for Internet distribution.
UNCLAS SECTION 01 OF 02 KUWAIT 001031
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/ARP, NEA/I
LONDON FOR TSOU, PARIS FOR ZEYA
TREASURY FOR BBALDRIDGE, PLANTIER
BAGHDAD FOR LKIMMEL, KTAECKER
E.O. 12958: N/A
TAGS: ECON EPET KCOR MOPS KU IZ
SUBJECT: KPC GETTING PAID BY SOMO, TRANSPORTERS ARE NOT
REF: A. KIMMEL - WERBERG EMAILS 03/22/06
B. ANKARA 01392
C. ANKARA 00775
D. BAGHDAD 00936
E. BAGHDAD 00766
F. BAGHDAD 00750
G. KIRKUK 00046
This cable is sensitive but unclassified; please protect
accordingly. Not for Internet distribution.
1. (SBU) Econ Officer spoke on March 22 with Kuwait
Petroleum Corporation EAMD of Marketing Mr. Waleed Al-Hashash
regarding SOMO payments to KPC for gasoline and diesel fuels
purchased by Iraq from Kuwait (see all reftels for
background.) Al-Hashash made the following points:
-- KPC is definitely getting paid in full by SOMO for the
purchased fuels.
-- KPC has a Letter of Credit (LC) that guarantees payment.
When the amount is low KPC asks to have it replenished, which
it always is.
-- There was only one time, last summer, when KPC had a
problem getting paid. KPC was instructed by the Kuwaiti
Ministry of Energy to continue fuel shipments despite the
payment problems, and the payments were resumed shortly after.
-- It is Al-Hashash's understanding that SOMO previously had
authorization from the Iraqi Government to purchase up to
$500 million in imported fuel each month. The cap was
recently reduced to $200 million, forcing SOMO to buy less
fuel each month.
-- Sometimes the money transfers are slow and there are other
administrative snafus, but Al-Hashash insisted that KPC is
getting paid by SOMO in full.
-- He said that it is clear to KPC that there is widespread
corruption and mismanagement within SOMO. He also said that
KPC is aware that there is a significant amount of smuggling
of fuel products out of Iraq, mostly in the north.
-- While KPC is getting paid, the companies that are hired to
transport, audit, and secure the fuel are not.
-- These companies have approached KPC and the Kuwaiti
Ministry of Energy, but there is little that Kuwait can do.
-- These companies are in a position to stop deliveries to
Iraq, and some have already done so.
-- Instead of paying these companies what they are owed, SOMO
decided to write off these invoices as "bad-debt" and simply
hire new companies.
-- KPC previously only released SOMO-purchased fuel to two
transporting companies authorized by SOMO. These are the
companies that have not been paid.
-- Last week, three new companies showed up at KPC all saying
that they have been authorized by SOMO to accept fuel
deliveries from KPC for transport to Iraq.
-- The Acting Director of SOMO was in Kuwait last week at the
same time, talking with KPC about the transport arrangements.
-- KPC told SOMO that it would prefer for SOMO to delegate
one "agent" or representative to be responsible for all
contact with KPC. KPC does not want to deal directly with
all of these transport companies, or to sort out which ones
are really authorized to take the fuel. KPC needs to know
who it is dealing with, and expects certain safety and
security standards to be met by the fuel transporters.
-- SOMO "did not like this idea" of the sole representative.
-- Al-Hashash said that the joke within KPC is to refer to
these new transport companies as "the new victims" because it
is likely that they will end up not being paid by SOMO, just
as happened to the original transport companies.
KUWAIT 00001031 002 OF 002
2. (SBU) The main thing Al-Hashash wanted to convey was that
SOMO "needs to have its financial affairs in order, including
payments to the transport and security companies," and that
it needs to be "very clear about who is authorized" to
receive fuel deliveries. He emphasized that, while KPC is
getting paid, all of these problems that SOMO is creating by
not paying the transport and security companies are making
things very difficult for KPC and KPC has no way to secure
and transport fuel to Iraq itself if SOMO doesn't make good
on the payments to the transporters and they all refuse to
make the deliveries.
********************************************* *
For more reporting from Embassy Kuwait, visit:
http://www.state.sgov.gov/p/nea/kuwait/?cable s
Visit Kuwait's Classified Website:
http://www.state.sgov.gov/p/nea/kuwait/
********************************************* *
LEBARON
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/ARP, NEA/I
LONDON FOR TSOU, PARIS FOR ZEYA
TREASURY FOR BBALDRIDGE, PLANTIER
BAGHDAD FOR LKIMMEL, KTAECKER
E.O. 12958: N/A
TAGS: ECON EPET KCOR MOPS KU IZ
SUBJECT: KPC GETTING PAID BY SOMO, TRANSPORTERS ARE NOT
REF: A. KIMMEL - WERBERG EMAILS 03/22/06
B. ANKARA 01392
C. ANKARA 00775
D. BAGHDAD 00936
E. BAGHDAD 00766
F. BAGHDAD 00750
G. KIRKUK 00046
This cable is sensitive but unclassified; please protect
accordingly. Not for Internet distribution.
1. (SBU) Econ Officer spoke on March 22 with Kuwait
Petroleum Corporation EAMD of Marketing Mr. Waleed Al-Hashash
regarding SOMO payments to KPC for gasoline and diesel fuels
purchased by Iraq from Kuwait (see all reftels for
background.) Al-Hashash made the following points:
-- KPC is definitely getting paid in full by SOMO for the
purchased fuels.
-- KPC has a Letter of Credit (LC) that guarantees payment.
When the amount is low KPC asks to have it replenished, which
it always is.
-- There was only one time, last summer, when KPC had a
problem getting paid. KPC was instructed by the Kuwaiti
Ministry of Energy to continue fuel shipments despite the
payment problems, and the payments were resumed shortly after.
-- It is Al-Hashash's understanding that SOMO previously had
authorization from the Iraqi Government to purchase up to
$500 million in imported fuel each month. The cap was
recently reduced to $200 million, forcing SOMO to buy less
fuel each month.
-- Sometimes the money transfers are slow and there are other
administrative snafus, but Al-Hashash insisted that KPC is
getting paid by SOMO in full.
-- He said that it is clear to KPC that there is widespread
corruption and mismanagement within SOMO. He also said that
KPC is aware that there is a significant amount of smuggling
of fuel products out of Iraq, mostly in the north.
-- While KPC is getting paid, the companies that are hired to
transport, audit, and secure the fuel are not.
-- These companies have approached KPC and the Kuwaiti
Ministry of Energy, but there is little that Kuwait can do.
-- These companies are in a position to stop deliveries to
Iraq, and some have already done so.
-- Instead of paying these companies what they are owed, SOMO
decided to write off these invoices as "bad-debt" and simply
hire new companies.
-- KPC previously only released SOMO-purchased fuel to two
transporting companies authorized by SOMO. These are the
companies that have not been paid.
-- Last week, three new companies showed up at KPC all saying
that they have been authorized by SOMO to accept fuel
deliveries from KPC for transport to Iraq.
-- The Acting Director of SOMO was in Kuwait last week at the
same time, talking with KPC about the transport arrangements.
-- KPC told SOMO that it would prefer for SOMO to delegate
one "agent" or representative to be responsible for all
contact with KPC. KPC does not want to deal directly with
all of these transport companies, or to sort out which ones
are really authorized to take the fuel. KPC needs to know
who it is dealing with, and expects certain safety and
security standards to be met by the fuel transporters.
-- SOMO "did not like this idea" of the sole representative.
-- Al-Hashash said that the joke within KPC is to refer to
these new transport companies as "the new victims" because it
is likely that they will end up not being paid by SOMO, just
as happened to the original transport companies.
KUWAIT 00001031 002 OF 002
2. (SBU) The main thing Al-Hashash wanted to convey was that
SOMO "needs to have its financial affairs in order, including
payments to the transport and security companies," and that
it needs to be "very clear about who is authorized" to
receive fuel deliveries. He emphasized that, while KPC is
getting paid, all of these problems that SOMO is creating by
not paying the transport and security companies are making
things very difficult for KPC and KPC has no way to secure
and transport fuel to Iraq itself if SOMO doesn't make good
on the payments to the transporters and they all refuse to
make the deliveries.
********************************************* *
For more reporting from Embassy Kuwait, visit:
http://www.state.sgov.gov/p/nea/kuwait/?cable s
Visit Kuwait's Classified Website:
http://www.state.sgov.gov/p/nea/kuwait/
********************************************* *
LEBARON