Seth Onyango

@SethManex

State-owned National Oil Corporation of Kenya (Nock) is in talks with Treasury to stave off insolvency as it reels from a Sh5.1 billion debt, with creditors keen to put it into receivership.

Nock’s financial woes has put on hold the Petroleum and Mining Ministry’s bid to revive the ambitious plan to supply poor households with affordable cooking gas.

Already, Sh3 billion earmarked for the mwananchi gas project has evaporated under the cloud of alleged corruption, supply of defective cylinders and lack of funds.

Yesterday, the Senate Committee on Energy heard that Nock was broke and thus unable to supply gas cylinders like initially planned.

Petroleum Cabinet Secretary John Munyes assured that the ministry will discuss with KCB and Stanbic bank to restructure the debt repayment to ensure the entity remains afloat.

“We will discuss with Treasury to find a way to save the corporation, because this is an important government agency and we must save it,” he said during a Zoom committee meeting.

In 2017, the Treasury allocated Sh2.2 billion for the three year-programme (2017-2019) and later increased the amount by more than Sh700 million through a supplementary budget, pushing the total funding to Sh3.1 billion.

But allegations of corruption saw the mwananchi gas project collapse as the state corporation faced liquidity squeeze.

In a bid to shore up its balance sheets, Nock resurrected an asset-sale plan that included putting up its properties worth Sh566 million for sale across the country.

They included retail stations and prime land. Nock had been operating at the mercy of bank overdrafts and facilities from commercial lenders, top being KCB and Stanbic bank.

Yesterday, Munyes was on the spot for the procurement of gas cylinders that were said to be faulty.

Nock chief executive officer Morintat Leparan told the Senate committee that the ministry procured 357,355 cylinders of 6Kg during the 2017/18 financial year, from Allied East Africa Ltd, Surge Energy, Accurate Power Systems and Metal Mate.

Out of the total number of 357,355 procured, 200,257 were supplied out of which 139,946 cylinders (70 per cent) of the total cylinders received were inspected.

Being defective

Of those inspected, 80,839 cylinders were accepted for circulation while 59,107 cylinders were rejected for being defective.

Out of the total of 80,839 cylinders accepted, 28,035 are currently in circulation in the market having been circulated through the pilot in Machakos and Kajiado in 2018. According to Munyes, no taxpayers’ cash was lost.

Mwananchi gas project is an initiative of the government to enhance LPG penetration in the country and ensure universal access of cooking gas to low income households. 

It was meant to reduce the use of biomass and kerosene as primary household cooking fuels, which have negative impact on the environment, respiratory health and sustainable economic development.

Beneficiaries of the cheap gas are issued with complete 6kg cylinders with gas after paying Sh1,100 that covered cost for the burner and grill. In 2017/18 financial year, 220 (40 ft.HC) containers were procured by the petroleum ministry and deployed across 38 counties at the sub-county level to be used as stock points.

Nine counties were not supplied due to failure of suppliers to deliver and were to be re-tendered by the ministry.  

“In the pilot counties of Machakos and Kajiado we have distributors already set up and operational,” Leparan told the Senate committee.