National Oil, Rubis deal is a debt trap, House team warns

National Oil petrol station along Haile Selassie Avenue in Nairobi on November 7, 2023. [File, Standard] A high-stakes deal between the National Oil Corporation of Kenya (NOCK) and Rubis Energy Kenya has triggered a storm in Parliament, with lawmakers warning that the transaction could quietly hand over critical State assets to private interests-leaving taxpayers to foot the bill. At the centre of the controversy is a Sh3 billion agreement signed early this year. Pokot South MP David Pkosing said that on paper, it looks like a lifeline where Rubis would provide desperately needed capital to the State-run oil marketer-half for working expenses, half to refurbish its neglected retail infrastructure. In return, Rubis would be paid back its money. But under scrutiny from the Public Investments Committee on Commercial Affairs and Energy, the deal is being called out as opaque, reckless-and potentially unconstitutional. "We are staring at a dead agency," said Pokot South MP David Pkosing, the committee chair. "The National Oil Corporation can't pay salaries. It can't sustain operations. And now we're risking handing it over to Rubis under terms we don't even fully understand." NOCK, a fully state-owned entity, operates across the entire petroleum value chain-exploration, infrastructure, and fuel retail. In upstream operations, NOCK holds Block 14T in the Tertiary Rift and is linked to projects in the Lokichar Basin, with potential interests in Blocks 10BB and 13T. On the retail side, it controls about five per cent of Kenya's petroleum market and plans to launch 185-200 new fuel stations to double its market share. The corporation's retail network is undergoing major upgrades, supported in part by a Sh6 billion investment from Rubis. It is also rolling out an Enterprise Resource Planning (ERP) system to strengthen internal operations. NOCK is currently being restructured into a holding company with three specialised subsidiaries: NOCK Upstream (exploration), NOCK Downstream (retail and clean energy), and NOCK Supply and Trading (imports, exports, and reserves). On Thursday, the committee ordered a special audit into the partnership and directed NOCK to freeze any further implementation-including the opening of an escrow account-until August 14, when the Auditor-General is expected to table a report. "I am very sure NOCK cannot repay that loan," Pkosing warned. "And when default happens, Rubis will walk away with public assets." Established in 1981 to represent government interests in oil exploration, fuel supply, and strategic reserves, NOCK now struggles under the weight of a Sh7.4 billion debt. Parliament said NOCK owes Sh3.4 billion to KCB Bank, Sh2.9 billion to Stanbic, and has lost significant market share in the downstream sector. A spot check by The Standard established that its fuel stations have been leased out, and staff go unpaid for months. The five-year, non-equity deal-approved by the Competition Authority of Kenya-was pitched as a public-private partnership to stabilize NOCK and strengthen national fuel security. Rubis would not acquire shares but would inject cash, provide technical expertise, and support NOCK's return to the market. But lawmakers say the terms of the arrangement suggest something closer to a debt trap than a rescue. "What is being called a partnership is in reality a loan. And we don't know the details," said the committee. "Is it secured against NOCK's infrastructure? Is there a Treasury guarantee? What happens if the company fails again?" The committee has laid out a series of questions for the Auditor-General to investigate which include if there was competitive bidding before Rubis was selected, what the repayment terms are, the legal framework of the deal and what happens to NOCK's existing agreements with third-party retailers. The worry is that NOCK's limited remaining assets-particularly its fuel station network-may have been pledged as collateral. In the event of default, Rubis could legally acquire them, effectively privatizing State infrastructure without parliamentary approval. "This is not just about oil," Pkosing said. "It's about public control over public resources. We are talking about energy security." The controversy unfolds against a backdrop of accelerated State divestiture. The government has moved to privatise several State firms, including Kenya Pipeline Company and KenGen. A recent push to amend privatisation laws has removed parliamentary oversight from the process, triggering fears that critical infrastructure is being handed over without public scrutiny. NOCK's deal with Rubis is seen by critics as part of this trend-an off-the-books privatization cloaked as a commercial agreement. "We've seen this before," said an energy ministry official, speaking on condition of anonymity. "The State fails a corporation, then calls in a private actor to 'save' it-only to realise, too late, that it was a takeover." What has particularly angered lawmakers is that NOCK has made no public disclosures about the specifics of the Rubis deal. Treasury's role is unclear. "There's no clarity. No documentation. No public engagement. Just silence," said the chairperson, "We are legislating in the dark."

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