National Oil Corporation (NOC) expects an injection of Sh5 billion from a non-equity strategic partner as it enters the final phase of its revitalisation plan.
The plans to revamp the State-run oil marketer got Cabinet approval in August. It completed public participation and stakeholder engagements yesterday.
A sweetener in the envisaged deal is NOC’s rights to import a third of all fuel products into the country as per circular Legal Notice No 96 of June 2010.
Legal Notice No. 43 of 2008 issued regulations guiding the establishment of the strategic petroleum reserves that required NOC to establish and manage strategic petroleum reserves equivalent to 90 days of consumption for the country.
The Head of Public Service Circular in 2015 also directed all Government Departments and State corporations to procure their Petroleum product requirements from NOC an advantage it has not fully enjoyed because of a debilitating cash crunch.
At a budget committee meeting last Friday, it emerged that strategic stocks are a major security issue for the country, but reviving the oil marketer to carry out the role would help avert shortages of the commodities mainly due to disruptions globally.
Thirty per cent of petroleum products translates into 1.54 billion litres of the 5.14 billion litres of fuel that Kenyans consume annually, according to official government data.
The strategic partner is expected to pump in Sh2 billion to rebrand and renovate all the 100 NOC pump stations across the country and another Sh3 billion for fuel stocks.
“The partner will come in on a profit-sharing basis and will not seek any shares in the 100 per cent government-owned corporation but will agree with NOC on the sharing of the proceeds,” said NOC Chief Executive Leparan Morintat.
It is expected that once revamped, NOC could seek to supply petroleum to all government departments and institutions. In 2021, Mr Morintat signed a fuel supply deal with Geothermal Development Company (GDC) that will see NOC supply the energy firm with more than 10 million litres of fuel products.
He termed the partnership a great example of fruitful and productive partnerships between government agencies working together for the common good of the Mwananchi.
Last month, the Cabinet approved the reconfiguration of the State corporation, which will see it split into three subsidiaries under one holding company.
These are NOC Upstream Ltd, which will cover upstream oil and gas exploration; NOC Downstream Ltd to handle marketing and distribution roles; and NOC Trading Ltd, which will hold strategic stocks of petroleum products for import and export.
It is expected that after the revamp, NOC Upstream will intensify oil and gas exploration in the country.
NOC operates its own exploration acreage in Block 14T, which is located within the southern Tertiary Rift Basin.