Halliburton subsidiary Kellogg Brown & Root (KBR), which defends its pricing as fair, has a contract with the US Army Corps of Engineers to rebuild Iraq’s oil sector. This has included importing gasoline products which are in short supply to the oil-rich nation.
“Millions of Americans want to help Iraqis but they don’t want to be fleeced (by Halliburton),” Representative Henry Waxman of California, told a news conference in Washington on Wednesday.
Waxman said army documents showed that as of 18 September, the US had paid Halliburton $300 million to import about 190 million gallons (719 million litres) of gasoline into Iraq.
Halliburton billed the government an average price of $1.59 per gallon (3.7 litres), excluding the company’s fee of 2%-7%, said Waxman.
He said the average wholesale cost of gasoline during that period in the Middle East was about 71 cents a gallon, a figure an oil industry source told Reuters was accurate. That meant Halliburton was charging more than 90 cents a gallon to transport fuel into Iraq from Kuwait.
“When we checked with independent experts to see if this fee was reasonable, they were stunned,” said Waxman, adding a reasonable transport cost would be 10 to 25 cents per gallon, especially as the US military was providing security.
“The overcharging by Halliburton is so extreme that one expert privately called it highway robbery”
Henry Waxman (D)
A Halliburton spokeswoman defended the pricing as fair and said KBR had to transport gasoline through a “hostile environment” into Baghdad.
“We use a sound procurement process which has been approved by the government for procurement activities,” said spokeswoman Wendy Hall. “KBR continues to negotiate fair and competitive prices to provide fuel to the Iraqi people,” she added.
Waxman sent a letter on Wednesday to the White House Office of Management and Budget complaining KBR was overcharging for petroleum products.
“The overcharging by Halliburton is so extreme that one expert privately called it highway robbery,” he wrote.
Army Corps of Engineers spokesman Bob Faletti said military auditors were closely monitoring work done by KBR and making sure the US taxpayer was not being overcharged.
Halliburton has so far received more than $1.4 billion in work in Iraq to repair and restore the country’s oil industry under a no-competition contract issued in March.