The National Oil Corporation of Kenya Ltd (NOC) has entered a strategic partnership with RUBiS Energy Kenya to tackle its ongoing financial and operational challenges while establishing itself as a key player in Kenya’s oil and gas sector.
This collaboration follows the successful completion of the Specially Permitted Procurement Procedure (SPPP) to secure a non-equity strategic partner in compliance with the Public Procurement and Asset Disposal Act, 2015 (PPADA). It is an eight-year, non-equity partnership approved by the Cabinet in 2023 which aims to revitalize NOC through financial support, operational modernization, and market expansion.
During the signing of the agreement, Opiyo Wandayi, Cabinet Secretary (CS) for Energy and Petroleum said the collaboration marked a transformative step in strengthening NOC by improving its capacity and creating long-term value for Kenyans.
“With this renewed profitability, the Corporation will be well-positioned to generate returns and, in the future, begin paying dividends to its shareholders,” Wandayi said.
Under the partnership, RUBiS will inject Sh6 billion into NOC, with Sh3 billion designated for stock financing and another Sh3 billion for infrastructure improvements. This funding will aid in clearing legacy debts, stabilizing NOC’s finances, and restoring profitability. The arrangement is structured as a profit-sharing model, rather than privatization with returns linked to the 182-day Treasury Bill rate plus four percentage points. This model ensures that NOC remains fully state-owned while benefitting from RUBiS’s financial and operational expertise.
Speaking during the signing ceremony, Leparan Ole Morintat, NOC’s Chief Executive Officer (CEO and Managing Director) said the oil and gas sector is highly complex and capital-intensive, requiring substantial investment and operational flexibility to stay competitive, while Olivier Sabrié, CEO of RUBiS Energie East Africa said it was important to leveraging diverse expertise and resources to create a competitive edge and generate value for all stakeholders involved.
“Given the significant demand for government resources, securing shareholder capital injection was not feasible. As a result, NOC sought a non-equity strategic partner to provide the financial support and technical expertise needed to revitalize the company and restore profitability,” Ole Morintat said. The process was initiated in 2019.
A crucial aspect of the deal is the implementation of an advanced Enterprise Resource Planning (ERP) system to enhance internal controls and operational efficiency. RUBiS will also provide capacity-building initiatives, including staff training, management support, and skills transfer to boost NOC’s competitiveness. This modernization effort is vital for NOC to adapt to the dynamic oil and gas market, where efficiency and agility are essential for success.
The agreement also includes the rebranding and renovating of NOC’s over 99 retail stations across Kenya to increase sales volumes and market share. This modernization aligns with NOC’s goal of handling up to 30 per cent of Kenya’s total fuel consumption. By utilizing its right to import 30 per cent of Kenya’s petroleum products under the Petroleum (Importation) Quota Allocation Regulations, NOC seeks to stabilize fuel prices and ensure a reliable supply chain. The partnership also emphasizes supporting independent oil marketers to foster inclusivity in the industry.
This strategic partnership is part of a broader government-approved restructuring plan aimed at transforming NOC into a profitable state corporation. By securing RUBiS as a non-equity partner, NOC endeavors to address its debt burden—estimated at Sh8.3 billion and capitalize on its comparative advantages in the oil market. The collaboration also aligns with Kenya’s economic objectives by reducing the cost of living through stable fuel prices and enhanced energy security.
NOC was among the State corporations earmarked for privatization due to persistent financial struggles, including significant debt and operational inefficiencies, which limited its competitiveness in the oil and gas sector.
