RUBIS Group will pump Sh6 billion worth of investments in its planned five-year deal with National Oil Corporation, fresh details have emerged.
Sh3 billion will go into stock financing and Sh3 billion for infrastructure improvements, including renovation and expansion of NOCK’s retail network.
Alongside the investment, the partnership will also introduce an advanced Enterprise Resource Planning (ERP) system to enhance operational efficiency and strengthen internal controls.
NOCK CEO Leparan ole Morintat said that in the plan, a profit sharing structure will be established alongside other arrangements on capacity-building initiatives, including staff exchange programmes and management support.
“So the activities that were approved by Cabinet was that the strategic partner will inject capital to finance stocks and capital expenditure for the renovation rebranding and expansion of our retail network to enhance efficiency and controls through the deployment of a robust ERP system,” said ole Morintat.
The Cabinet has mandated that NOCK brings in a non-equity strategic partner, meaning that Rubis will not acquire shares in NOCK but will provide investment in exchange for revenue-sharing arrangements.
“This is a profit-sharing model, not a privatisation of NOCK. The strategic partner will earn returns through an interest rate pegged at the 182-day Treasury Bill rate plus four percentage points,” clarified ole Morintat.
Morintat explained that the strategic partnership’s objective is to grow the value of NOC’s downstream business as measured by Earnings before interest, taxes, depreciation (EBITDA) through enhanced sales, supported by modernised infrastructure and improved internal controls to regrow NOC’s market share and profitability and hence enhance the corporation’s brand equity.
“That means we bring a partner on board who will have zero shares in the national oil corporation of Kenya but bring investment so that we leverage on their financial capacity.”
As part of the revival efforts, the government has approved a restructuring of NOCK through the formation of a holding company with three distinct subsidiaries: NOCK Upstream Limited, which will focus on exploration and production. NOCK Downstream Limited, responsible for marketing, retailing, and distribution of petroleum products, including emerging green energy solutions and NOCK Supply and Trading Limited, which will handle importation, exportation, and the establishment of strategic petroleum stocks. NOCK has been grappling with a rise in debt owed to banks and creditor which currently are valued Sh7.98 billion.
Of this, Sh5 billion are owed to Kenya Commercial Bank (KCB) and Stanbic Bank, pending bills Sh1.53 billion, Sh548.4 million for dealers outstanding prepayment and Sh58.8 million as dealers’ cash deposits.
Documents show that as of today, the KCB Bank loan stands at Sh3 billion after National Treasury entered into a payment plan with the bank and it took a haircut of Sh3.478 billion that saw the first instalment of Sh1.215 billion being paid last month.
