The Kenya Government has approved a proposal to revive and commercialize the National Oil Corporation of Kenya (NOCK), a state-owned company that operates in the oil and gas sector.
The proposal by the Office of the President aims to restructure NOCK into three subsidiaries that will focus on different segments of the petroleum product value chain.
The three subsidiaries are NOC Upstream Limited, which will deal with exploration and upstream production activities and services.
Secondly, NOC Downstream Limited will handle the marketing and distribution of petroleum products.
Finally, NOC Trading Limited will specialize in holding strategic stocks of petroleum products for import and export.
The plan is expected to enhance NOCK’s efficiency, profitability, and competitiveness in the oil and gas industry.
“Under the proposed turnaround strategy, NOCK will benefit from a partnership that restructures it into three subsidiaries segmented around the petroleum products value-chain,” dispatch from the cabinet reads.
NOCK was incorporated in April 1981 under the Companies Act, Cap 486 of the Laws of Kenya with a mandate to participate in all aspects of the petroleum industry.
National Oil Corporation’s bankruptcy and irregularities
In 2022, the Auditor-General exposed the National Oil Corporation as a technically bankrupt entity that is riddled with financial and procurement irregularities.
In a report to Parliament, Nancy Gathungu said that Nock’s losses increased to Ksh 4.03 billion in the year ended June 2021, up from Ksh 3.06 billion the previous year.
The state corporation also incurred an operating loss of Ksh 969.8 million, up from KSh 494.5 million in the prior year, raising doubts about its viability.
The report further revealed that Nock’s current liabilities of Ksh 8.95 billion exceeded its current assets of Ksh2.65 billion, thus worsening its liquidity position.
“These events or conditions, along with other matters, indicate material uncertainty regarding the corporation’s ability to continue as a going concern. The corporation is, therefore, technically insolvent. Its continued existence is dependent upon the financial support of the government, bankers, and its creditors unless the management improves its performance to reduce reliance on financial support from the shareholders,” the report stated.
The Auditor-General recommended that Nock implement measures to improve its financial performance, adhere to procurement laws and regulations, and ensure accountability and transparency in its operations.