Kenyan MPs have commenced investigations into the proposed Ksh 6 billion agreement between the National Oil Corporation (NOC) and Rubis Energies Kenya (REK). The deal, structured as a non-equity strategic partnership, would see Rubis take over the State agency’s operations.
The Energy Committee has directed NOC to convene a meeting within the next two weeks, involving Rubis, the Attorney General, and all relevant stakeholders, to clarify how the deal was brokered.
At a meeting with NOC officials yesterday, Energy Committee members, led by Nyatike MP Tom Odege, who chaired the session, emphasised the gravity of the proposed takeover. They stressed that the matter requires thorough deliberation before any decision is reached.
Odege stated: “We are asking NOC and all the companies under them to organise a retreat in the next two weeks so that we can discuss this matter. We also want the Attorney General to be present so that we have full transparency.” Committee Vice Chairperson and Narok East MP Lemanken Aramat reinforced this position, asserting that the committee requires sufficient time to scrutinise the report tabled by NOC before engaging in further deliberations. He added: “The issues with this contract are very weighty and cannot be discussed in a single meeting. We need a retreat where all the parties can attend and we can obtain full details.”
The committee’s directive followed a presentation by NOC Chief Executive Officer Leparan ole Morintat, who tabled documents detailing the partnership’s framework. According to these documents, Rubis Energies will inject Ksh 6 billion into NOC for capital expenditure—including renovation, rehabilitation, and revitalisation of assets—as well as working capital to finance stocks. The overarching goal is to generate shared business value, measured by Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA).
To enhance internal controls and operational efficiency, the documents reveal that REK will deploy a fully encrypted end-to-end integrated ERP system for NOC’s downstream business. Additionally, it will promote a business-first class culture and an operational excellence mindset through training, a staff exchange programme, and management support.
The document states: “The partnership is a non-equity strategic partnership premised on Rubis Energies injecting Ksh 6 billion into the National Oil Corporation.” It further notes: “The tenure of the non-equity strategic partnership will be eight years, renewable once. The strategic partnership agreements with REK will be assigned to NOC Downstream Ltd.”
Morintat explained that the decision to engage Rubis Energy followed a Cabinet directive approving the revival and commercialisation of NOC. The Cabinet instructed the Cabinet Secretaries for Energy and Petroleum, as well as National Treasury & Economic Planning, to implement the decision.
The document outlines: “The strategic partnership’s objective is to grow the value of NOC’s downstream business as measured by EBITDA through enhanced sales, supported by modernised infrastructure and improved internal controls, to restore NOC’s market share and profitability and enhance the Corporation’s brand equity.”
Morintat also noted that the process of restructuring NOC into a holding company with three subsidiaries is ongoing and is expected to be completed this quarter. The Cabinet directed NOC to oversee the conversion of the corporation into a holding company with three wholly owned subsidiaries:
NOC Upstream Ltd – responsible for exploration, production, and other upstream activities.
NOC Downstream Ltd – responsible for refining, storage, and distribution of petroleum products.
NOC Trading Ltd – managing trading and commercial transactions.
Additionally, the Cabinet approved onboarding a non-equity strategic partner on a profit-sharing basis to inject working capital for stock financing and capital expenditure. This includes rebranding, renovating, and expanding the retail station network, as well as capacity building, technology transfer, and improving efficiency through a robust ERP system.
Morintat emphasised: “It is important to note that the Cabinet approved the onboarding of a strategic partner on a profit-sharing basis and not the privatisation of the Corporation.” The Cabinet’s decision follows revelations that NOC’s total debt to various creditors and banks stands at Ksh 7.98 billion. This includes:
- Ksh 5 billion is owed to Kenya Commercial Bank (KCB) and Stanbic Bank.
- Ksh 1.53 billion in pending bills.
- Ksh 548.4 million in outstanding prepayments for dealers.
- Ksh 58.8 million in dealer cash deposits.
Documents show that as of now, the KCB Bank loan stands at Ksh 3 billion after the National Treasury entered into a repayment plan with the bank. The plan involved KCB accepting a haircut of Ksh 3.478 billion, with the first instalment of Ksh 1.215 billion paid last month. The document states: “In the financial year 2022/23, the Corporation’s cumulative loss before tax stood at negative Ksh 6.7 billion. Its EBITDA was negative at Ksh 457 million, and shareholder equity was eroded to negative Ksh 2.6 billion, as shown in the annexed financial statements.”
