National Oil Corporation ambitious plan seeks to rollout 100 service stations

By Macharia Kamau

 After several failed attempts to be trend-setter in the petroleum industry, the National Oil Corporation is making another stab.

The firm is bullish and plans to position itself as a market leader and a continental reference point in running national oil corporations. The firm’s roll out plan has since diversified into other areas besides sale of petroleum products. They include oil exploration and building petroleum infrastructure.

 Within the next two years, the oil firm plans to double its market share in petroleum sales. It also wants to start drilling exploratory wells in a block in Magadi where it has an oil block and set up strategic petroleum reserves. This is expected to cushion the country from sudden and frequent swings in prices of petrol.

 The move involves an ambitious and capital-intensive plan. While NOCK Managing Director Sumayya Hassan-Athmani prefers to keep the total amounts and financing plans that will go into the plan under wraps, she said the company is well equipped with several financiers already willing to come on board. It can as well as plough back earnings from its current operations, she added.

 “Currently, we have 106 stations, we want to double that number over the next two years and we will be very innovative in doing that... I want to achieve market leadership for NOCK in the retail market in the next couple of years,” she said. “We have different models that include partnerships with Kenyans that have strategically located parcels of land whereby we build the station and share earnings. We also have mini petrol stations – referred to as a kanga – that more cost effective in terms of construction cost.”

Controversy

Ms Athmani has in the recent past been in the eye of the storm, following an offer that NOCK made to former President Mwai Kibaki at a farewell ceremony organised by public service employees. Some of her board members recently wrote to Energy PS Patrick Nyoike noting that the decision was made without the knowledge of the board. They argue it was arrived at by two board members; Ms Athmani and chairman (Peter Munga).

Athmani, however, pointed out that NOCK board members are jittery because she has refused to play ball with them, adding that she could not bend to the rules aimed at fleecing the Corporation. “One of the things that I have done in the time I have headed NOCK is enhance governance and as with any other settings, some people tend to oppose such efforts,” she said. “There are systems in place to address the issues but they have resorted to mudslinging.”

 She added that the ‘gift’ to Kibaki was a proposal for a business venture, something she said NOCK has done with other Kenyans, including the disadvantaged. She says if the former President is willing to partner with NOCK and give land, then the company would put up a petrol station.

Failed attempts

 “What we had proposed was a partnership like what we have with other Kenyan where they provide the land and we put up the station and share revenues. And we can do that with any Kenyan,” she said. “It was not meant to be a station for personal use...what would he do with a petrol station in his backyard?”

 The firm, established in 1981, had failed in its attempts to make a mark in the market. It is mandated to stabilise prices of petroleum products but has in the past failed to deliver on this, prompting the government to capping prices of some of the products, through the Energy Regulatory Commission (ERC).

 In addition to the downstream business – industry lingos for petroleum product sales especially at the retail level.  It is also angling to tap into the possibility that the country might have major oil deposits. At the moment, the Corporation holds the State’s share in the production sharing contracts that the Government has with other firms exploring for oil in the country.   The firm is also prepping its own block for drilling.

 It recently called for expression of interest from international to will carry out geological studies on an exploration block that it has been allotted by the Government. The outcome of the studies is expected to guide it in the exploratory drilling.

 Athmani expects the studies and analysis of the seismic data to be complete in the course of this and next year and start drilling by end of next year.  “Many oil companies have pulled away from downstream and are focusing on upstream because margins in the downstream business have thinned,” she said.

 “Currently only foreign firms are exploring in Kenya and we are taking a lead role as the national oil corporation to secure the resource and increase its value for Kenya. We are making attempts to build capacity as well as trying to steer debate on different issues in the oil exploration segment.” In the exploration business, the firm will tender for partners with whom it will share the risk or production.