Home Africa Kenya: Broke National Oil Needs Sh7.5 Billion Bailout – Report

Kenya: Broke National Oil Needs Sh7.5 Billion Bailout – Report

Kenya: Broke National Oil Needs Sh7.5 Billion Bailout - Report

The National Oil Corporation of Kenya (Nock) has sunk into Sh7.5 billion financial rut, adding to the burden taxpayers will bear to rescue the state-owned oil marketer.

A business analysis carried out by consultants hired by two local banks that have been funding the parastatal show that the amount will be needed to keep Nock running in 2021, without which the agency will collapse.

The consultants, who were commissioned by Kenya Commercial Bank and Stanbic Bank Kenya, to carry out a business review of the state oil marketer now recommend that the agency should be wound up or restructured before any funding is given to avoid the risk of further losses.

Leadwood Energy and Kurrent Technology wrote in the review on Nock that the firm is riddled with operational inefficiencies, is overstaffed and mismanaged, making any funding in its current status a potential loss.

Sh7.5 billion

“The estimated total funding gap as at June 30 is Sh7.5 billion. The consultant’s observations are that Nock is technically insolvent, and any additional credit lines to it should only be after deficiencies have been satisfactorily addressed,” reads the report presented before the National Assembly Committee on Energy.

The amounts needed to keep Nock afloat comprise Sh5 billion in debt, Sh2 billion in net working capital gap and Sh0.5 billion as expected operational losses until June 2021.

The state agency was found to be technically insolvent, not generating enough revenue to sustain its operations including salary obligations and had weak stock management and financial controls.