The latest woes of the National Oil Corporation (Nock) may have come as a shock for a State parastatal with all the instruments to make money in a prolific market where demand beats headwinds including the latest Covid -19 pandemic.
For a company that has had several regulatory ‘through passes’ from the government, Nock, as it is commonly known in the market, has failed to score and now the company is sinking according to its leaders.
Its current provisional loss for the year to June 2020 has deepened to Sh1.3 billion (from Sh0.3 billion the previous year), its chocking from loans, shareholder equity has diluted by Sh1.34 billion to a mere Sh0.28 billion in one year and owes suppliers Sh628 million.
Kenya Commercial Bank is already trailing its assets for auction over a Sh3.8 billion debt and that is not all; debt to banks total Sh5.2 billion in what the company chief executive officer Gideon Leparan now calls ‘a real threat.’
"The bank issued a demand for full settlement of the loans in 30 days, failure to which they will institute recovery measures. This is a real threat and should nothing be done by the shareholder, then Nock may be wound up," told the Senate Standing Committee in Energy while appearing before it.
Sh8 billion
KCB had commissioned a business review on Nock earlier in the year and found the corporation on a death bed, and the medicine was costly. It needed Sh8 billion to breathe or Sh500 working capital injected monthly for 16 months. Nock claims the findings were never shared with it, its parent ministry or Treasury.
While it may be easy to ignore the collapse of Nock just like any other State entity trying its hand in the highly competitive sector where private sector players never sleep, fuel business and the silver spoon with which NOC has been fed shocked the sector on just how it got chocked.
The company, which was set up to become a special instrument for the Government of Kenya to have greater control of the petroleum sector, has had its fair share of favours from the State.
Before importation of fuel was allotted to other players through the Open Tender System, Nock had the preserve to ship in 30 per cent into the market. The favour that was officially lifted in October 1994 continued for two more decades, sparking outcry from other players.
A directive issued on April 30, […]
