Delays on the proposed five-year deal between cash-strapped National Oil Corporation (Noc) and Rubis could extend to August, amid government red tape in approving the agreement.
Energy and Petroleum CS Opiyo Wandayi yesterday said that ‘government procedures’ are behind the delay, even after the Competition Authority of Kenya (CAK) okayed the deal.
Noc, which has for the past decade grappled with mounting losses and loan defaults had been given up to end of September 2023 to ink a deal with an oil marketer who would in turn pump at least Sh6 billion to help revive the State-owned firm.
French-oil major Rubis early last year agreed to pump Sh6 billion into Noc, with Sh3 billion being for working capital while the remainder is to be used in revamping and expanding Noc’s fuel stations countrywide. Rubis will recoup its billions of shillings via a profit-sharing arrangement.
CAK allowed the two firms to go ahead with the deal in December last year, on fulfilment of conditions such as each of the firms not infringing on the roles of the other in the joint venture and also preservation of the Noc brand name.
“The deal is still on but normal government procedures are behind the delay. Give us a maximum of six months then you will see operations start under this working framework,” Mr Wandayi told this publication yesterday.
Government red-tape refers to the bureaucracy or a series of complicated tasks that seem unnecessary but that must be done in order to get government’s approval for a deal.
The Rubis-Noc deal was taken to the Attorney General for scrutiny in April last year. This is because the Attorney General must check and approve or disapprove the terms of all deals that government agencies sign.
Extension of the delays to nearly two years continue to further hamper Noc’s efforts of making up for the years that it has fallen behind local and international oil marketers.
Rubis will get 30 percent of fuel sales as part of recouping its capital injection while Noc will retain 70 percent in the profit-sharing arrangement.
Besides lifting the fortunes of Noc, the deal will also help Rubis further cement its grip as the second biggest oil firm in Kenya.
While Noc’s market share was less than one percent as at June last year, Rubis overtook TotalEnergies Marketing to become the second biggest player with a share of 15.56 percent compared to the 15.06 percent of TotalEnergies Marketing. Vivo leads with a share of 22.06 percent.
Noc at its prime had over 100 fuel stations spread across the country but subsequent losses forced it to abandon most of them while the few remaining ones are dilapidated and barely standing.
Two loans that Noc tapped from KCB Group and Stanbic Bank have over the years ballooned to Sh8.3 billion on accumulation of interest and penalties, from the initial amount of Sh4.8 billion.
The government-owned firm is also technically insolvent with its liabilities of Sh11.45 billion stripping the Sh2.34 billion worth of assets as at June 2023, underlining its precarious state.
Noc wrote to the National Treasury seeking a Sh1.535 billion bailout in December last year, where Sh1.215 billion was to be used in partially paying for the KCB Group loan.
