Nock rolls out revival plan, seeks your views
Motorists and a motorcyclist drive past a National Oil Corporation petrol station in Eldoret town on April 13, 2013.
The National Oil Corporation of Kenya (Nock) has invited public views on its proposed revival and commercialisation plan as it seeks to shield itself from collapse.
National Oil chief executive officer Leparan Morintat said the cash-strapped firm would present its turnaround proposals to the public across all 47 counties from September 25-26,2023.
“This revival and commercialisation of Nock will result in several benefits such as specialisation and diversification of operations, enhanced efficiency, improved access to capital, enhanced risk management, and internationalisation. A revived and strengthened Nock will create jobs, reduce the cost of living, enhance oil and gas security, expand the government revenue base, and strengthen forex,” he said.
The Cabinet on August 8, 2023, approved the restructuring of Nock by converting it to a holding company with three subsidiaries.
The government will then hold onto the strategic assets through two subsidiaries but allow the downstream market entity, which will control Nock’s 100 fuel stations, to be run profitably by a private investor.
Profits from the entity will then be split with a deep-pocketed investor, who will be sourced from licensed oil marketers locally and abroad.
As part of the plan, the Cabinet approved the conversion of National Oil into a group holding company with three distinct subsidiaries, including Nock Upstream Limited to handle exploration and upstream production activities and services.
Nock Trading Limited will operate in the midstream, specialising in holding strategic stocks of petroleum products for import and export while Nock Downstream Limited will focus on marketing and distribution of petroleum products.
“The transformative actions strengthen Kenya’s socio-economic fabric by fostering inter-generational equity through an improved framework for social protection coupled with the revival of State corporations within agriculture, petroleum, and energy sectors,” the Cabinet dispatch said.
Presently, National Oil is a fully integrated State corporation involved in all aspects of the petroleum supply chain as a single unit.
The trading unit is meanwhile expected to run the importation of petroleum products, exports, and management of the country’s strategic petroleum reserves.
A non-equity strategic partner in the fuel marketing business would also be expected to provide expenditures to address financial and operational challenges.
National Oil is in a precarious financial situation, with its current liabilities for the year ended June 2021 having exceeded current assets by Sh6.3 billion, leaving it technically insolvent.
The State agency currently does not have working capital for its downstream operations and from 2021 has been relying on third parties to finance its petroleum imports. Its accumulated losses at the end of the period stood at Sh4 billion after returning a net loss of Sh1.32 billion.
