State splits Nock into 3 firms in drastic reforms
Motorists and a motorcyclist drive past a National Oil Corporation petrol station in Eldoret town on April 13, 2013.
The government has split the National Oil Corporation (Nock) into three entities with different mandates as part of drastic reforms aimed at turning around the financial fortunes of the loss-making State-owned entity.
The Cabinet yesterday approved the division of the parastatal into NOC Upstream Limited, NOC Downstream Limited and NOC Trading Limited.
“Cabinet also considered and approved the proposal to revive and commercialise the National Oil Corporation of Kenya (Nock). Under the proposed turnaround strategy, Nock will benefit from a partnership that restructures it into three subsidiaries segmented around the petroleum products value-chain,” said a dispatch from Cabinet.
In the new strategy, NOC Upstream Limited will focus on exploration and upstream production activities and services at a time Kenya is aiming to join the league of oil exporting countries. Nock is a player in the upstream market and owns 100 per cent of the stake in Block 14T located in the Magadi Basin.
NOC Downstream Limited will be focused on marketing and distribution of petroleum products, and will be expected to pose stronger competition to the dozens of players in the oil marketing business in Kenya.
NOC Trading Limited will specialise in holding strategic stocks of petroleum products for import and export. Through Legal Notice no 43 of 2008, Nock was mandated to establish and manage strategic petroleum reserves equivalent to 90 days of consumption for the country.
The State firm was ranked as the second worst performing parastatal only behind the South Nyanza Sugar Company Limited, according to a report by the National Treasury that covers the financial year 2020/21 and evaluated the performance of 232 State corporations and 98 tertiary institutions.
Nock was established in April 1981 with a mandate to spearhead petroleum exploration activities in the country, guarantee security for the supply of petroleum products and stabilise prices of petroleum products.
Mismanagement, market inefficiencies and huge debt have, however, driven the company into year-on-year losses with the unending financial struggles making the firm unable to perform its mandate.
The parastatal has a wide network of over 110 fuel stations spread out across the country.
Vivo Energy Kenya is currently the largest oil marketing company in Kenya by market size and is the distributor of Shell-branded products.
In the financial year 2021/22, Vivo had a market share of 23.83 per cent, according to industry data from the Energy and Petroleum Regulatory Authority. Others are Total Energies (17.3 per cent), Rubis Energy (10.02 per cent) and Ola Energy (6.82 per cent).
