Sh6 Billion NOC-Rubis Deal Under Scrutiny

Lawmakers have launched an investigation into the proposed Sh6 billion deal between the National Oil Corporation (NOC) and French energy giant Rubis Energies Kenya (REK), which would see Rubis take over the state agency’s operations as a non-equity strategic partner.

The deal, aimed at revitalizing NOC’s struggling downstream business, has raised eyebrows among members of the Energy Committee, who are demanding transparency and accountability.

During a tense meeting with NOC officials, Energy Committee members, led by Nyatike MP Tom Odege, directed the corporation to convene a retreat within two weeks to discuss the deal with all stakeholders, including the Attorney General and Rubis representatives.

“We are asking NOC and all the companies under them to organize a retreat in the next two weeks so that we can discuss this matter. We also want the Attorney General to be present in the meeting so that we can know everything,” Odege stated.

Committee Vice Chairperson and Narok East MP Lemanken Aramat echoed these concerns, emphasizing the gravity of the issue. “The issues with this contract are very weighty and cannot be discussed in one meeting. We need a retreat where all the parties can attend, and we are able to get details,” Aramat said.

The probe comes after NOC CEO Leparan ole Morintat tabled documents outlining the partnership, which would see Rubis inject Sh6 billion into NOC for capital expenditure, including the renovation and expansion of retail stations, and working capital to finance stocks. The deal, structured as an eight-year non-equity partnership renewable once, aims to boost NOC’s profitability and market share through enhanced sales, modernized infrastructure, and improved internal controls.

According to the documents, Rubis will also deploy a fully encrypted enterprise resource planning (ERP) system and implement staff training and exchange programs to foster operational excellence.

Morintat clarified that the partnership aligns with a Cabinet decision to revive and commercialize NOC, emphasizing that the deal does not equate to privatization. “The Cabinet approved the onboarding of a strategic partner on a profit-sharing basis and NOT the privatization of the corporation,” he stated.

However, the deal has been overshadowed by NOC’s dire financial situation.

The corporation’s total debt stands at Sh7.98 billion, including Sh5 billion owed to Kenya Commercial Bank (KCB) and Stanbic Bank. NOC reported a cumulative loss of Sh6.7 billion in the 2022/23 financial year, with shareholder equity eroded to negative Sh2.6 billion.