Kenya Pipeline Corporation (KPC) planned privatisation has hit turbulence as legislators demand full disclosure before granting the first approval. Members of the joint parliamentary committees on Energy, and Privatisation and Public Debt, say they will not approve the process without clarity on the company’s valuation, the takeover details of the Kenya Petroleum Refinery Limited (KPRL), and the price per share to be offered to the public.

Kwenya Thuku, a member of the Energy Committee, criticised the lack of transparency, saying even the evaluation report on KPC’s assets had not been shared. He also noted that the takeover of KPRL by KPC remained unexplained.

Wealthy individuals

“KPC took over the management of Kenya Petroleum, that might have not been explained, there are so many grey areas that you, CMA, these regulators, must bring forth this committee to speed as to approving or giving the go ahead, but you cannot tell us to give you the go ahead, then go do your business and float these shares,”  he demanded.

The MPs also demanded assurances that ordinary Kenyans, not just a few wealthy individuals or foreign investors, would own the majority of the shares. “KPC is a security institution. What if the majority of shareholders end up being foreigners? The biggest consumer is Uganda—where are they in all this?” one legislator asked. Additionally, they stated the potential risks associated with the transition need to be outlined and the impacts to the petroleum sector in foreseeable future.

However, Opiyo Wandayi, Energy Cabinet Secretary who also appeared before the joint parliamentary session stated that there no significant risks that would arise from the transaction. “We do not envisage any fiscal risks from the transition as long as the government remains a key shareholder. We have done our own analysis and I can affirm that,” he said.

While making their presentation before the committee, the Capital Market Authority (CMA) represented by the CEO, Wycliff Shamiah, stated that before listing, all the relevant information pertaining a company must be provided before listing.

He said in this regard, full information on KPC needs to be collected prior by their teams which first of all requires the approval of the Parliament to have the process competed, a factor which the MPs disagreed with.

They noted that the approval should only come after the full information has been presented in a bid to achieve transparency.

“We are saying for it to be complete before they come to us, they will have to go through certain teams which they need to get. So, it should not be before you approve. You approve, then they go into this process,” Shamiah stated.

At the same time, with regards to the valuation of the corporation, Wandayi while quoting the latest financial statements, financial 2024, stated that the actual valuation stood at Sh120.7 billon and with no liabilities.

Capital investment

“The corporation has not received any significant capital investment in the last five financial year, this is in the financial statements that are in the public domain,” he said.

Wandayi added that the corporation has been on an upward trajectory, citing that it’s revenue during the year amounted to Sh39.8 billion with gross profits reaching 16.5 billion.

Furthermore, he noted that KPRL is at the still end of the of being brought under KPC and that its value has not yet been factored in in the Sh120.7 billion.

“We are at the tail end of the transaction so this means that its value has not been added to KPC’s total value. We should be able to have a final value once the transaction has been completed,” he stated.

Thuku, however, dismissed the value arguing that a single line under KPC is value at approximately Sh60 billion.

“Chair really we cannot approve something like this, let them produce disclosure before any further discussions,” he said.

Joseph Makilap a member of the committee also expressed his dissatisfaction with the information saying: “So you want to sell the corporation yet it does not have KPRL under its arm. So, you are saying the report is incomplete. Then what exactly are you selling?”