The financially crippled National Oil Corporation of Kenya (Nock) risks auction and asset seizure over Sh5.3 billion defaulted bank loans.
The State-owned parastatal owes KSB Sh3.8 billion and Stanbic Bank Sh1.5 billion in loan principal together with interest.
In a letter dated August 13, 2020, KCB demanded full payment of the loan within 30 days and failure of which the lender would institute recovery measures.
“This is a real threat and should nothing be done by the shareholder, the Nock may be wound up,” Gideon Morintat, the Nock chief executive, told the Senate Committee on Energy.
National Oil Corporation of Kenya said KCB had reneged on an April 2020 plan that consolidated the loans and issued a moratorium on principal and interest until February 2021 as it anticipates a lump sum repayment.
Nock also noted that it owed Stanbic loan amounting to Sh1,459,899,790 but it did not say whether the bank had given out demand notices.
Nock wants the government through the Treasury to give out an Sh5.93 billion bailout to clear the debt and pending bills of Sh628 million it owes small and medium enterprises.
“As a way forward, the shareholder (National Treasury) consider providing funds to finance working capital requirement for financial year 2020/21 estimated to be Sh3 billion. This can be staggered,” Morintat said.
On Thursday, the Senate ordered the Auditor-General Nancy Gathungu to conduct a forensic audit of the Sh5.3 billion that the parastatal borrowed from KCB and Stanbic Bank.
The Senate committee also summoned Energy Cabinet Secretary Charles Keter to appear before it next week to expound on the allegation that Nock opted to sell Nairobi Oil Terminal at Sh1.4 billion as part of a deal to clear its KCB debt.
In submissions to the committee chaired by Nyeri Senator Ephraim Maina, Morintat disclosed that KCB commissioned liquidity and an independent business review on the corporation in April 2020.
“The initial draft issued in May indicated that to turn around the business, Nock requires a working capital injection of Sh500 million on a month on month basis for 16 months,” Morintat told the committee.
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He added that the final draft was submitted to KCM on August 28, 2020, but the lender is yet to share the details of the report with the National Oil, the Treasury, or the Ministry of Energy.
Nock said it was in the course of implementing a 15-year transformation plan funded by the Ministry of Energy at a tune of $2 million. The plan is expected to restructure the corporation’s businesses and operations for sustainability purposes.
In the recent past, the state-owned parastatal has struggled to grow its market share which is at 70 percent dominated by multinational petroleum marketers
Petroleum Institute of East Africa placed the market share of Nock at 3.3 percent as of June 2019 compared to 4.4 percent as of December 2015.
