Broke Treasury speeds up KPC sale in bid to raise Sh100b

The cash-strapped National Treasury is aggressively pushing for the rapid sale of a stake in the state-owned Kenya Pipeline Company (KPC).

Treasury anticipates approximately Sh100 billion in proceeds from the sale of the assets-rich energy monopoly in a bid to bolster the national budget.  

The move, detailed in a sessional paper submitted to the National Assembly, also outlines plans to allow ordinary Kenyans, including KPC employees, to acquire a piece of the firm through an Initial Public Offering (IPO) on the Nairobi Securities Exchange (NSE). 

The timeline for this significant privatisation is ambitious. According to the sessional paper titled "Work Plan For The Proposed Privatisation Process," the detailed proposal was submitted to the Cabinet in July and was approved the same month.  

A sessional paper is a document presented to a legislative body, such as Parliament, to outline government policies, proposals, or reports.

The submission to the National Assembly has already been done, with the final approval of the specific privatisation proposal by the National Assembly expected by next month (September 2025). 

This expedited calendar underscores the John Mbadi-led Treasury's urgent need for funds. 

"The National Treasury expects to raise approximately Sh100 billion from the transaction," the Sessional Paper states.  

This substantial sum is a critical component of the President William Ruto government's broader economic reform agenda, which aims "to enhance efficiency, competitiveness and financial sustainability in key state-owned enterprises," and crucially, "raising of resources to support the Government budget." 

KPC, established in 1973, operates an extensive 1,342-kilometre pipeline network and storage facilities, vital for transporting petroleum products from Mombasa to the hinterland and serving landlocked East African countries including Uganda, Rwanda, South Sudan, and parts of the Democratic Republic of Congo.

It is wholly owned by the government. The proposed method of privatisation is a public offering of shares, specifically an IPO, through the Nairobi Securities Exchange (NSE). 

This approach is favoured according to Treasury documents, for its transparency and for enabling "broadening ownership in the economy.” 

The sessional paper also emphasises that this method will "empower ordinary Kenyans to own a stake in one of the country's profitable and strategic enterprises, promote inclusive economic growth and strengthen transparency and corporate governance through stock exchange listing and regulatory oversight." 

For KPC's workforce, the proposal includes a direct path to ownership. The document states: "The inclusion of an Employee Share Ownership Plan (ESOP) will ensure that staff share in the company's future growth." 

Furthermore, the government aims to encourage broader public participation, noting that the "sale of shares through the Nairobi Securities Exchange will allow many Kenyans/the public to participate in KPC as has been the case in previous successful IPOs like KenGen and Safaricom." 

Unlike loss-making parastatals, KPC has demonstrated strong financial performance, making it an attractive prospect for investors.  

For the financial year 2023-24, the company reported a total revenue of Sh35.37 billion and a profit after tax of Sh6.87 billion.  

Its operating profit for the same period stood at Sh11.8 billion, showcasing its profitability as a strategic asset.  

The sessional paper highlights KPC's "significant achievements" in meeting its founding objectives, including reducing road dependence for fuel transport, enhancing national energy security, and reinforcing Kenya's regional leadership in energy logistics. 

Despite its strong performance, the sessional paper identifies several challenges facing KPC, including "Bureaucracy in Projects approval and roll out" leading to delayed diversification projects, "frequent changes in Management level" disrupting effective strategy execution, and "Shifting market dynamics and changing opportunities" in the regional crude oil landscape.  

The document argues that KPC, now a "mature business," requires to "operate in line with market principles to enhance its efficiency and attract market funding to improve its capacity." 

Privatisation is presented as a solution to unlock value and improve service delivery by attracting market funding and professional management. 

The sessional paper, prepared per the Privatisation Act, 2005, was approved by the Cabinet in July 2025.  

Treasury Cabinet Secretary formally sought its approval from the National Assembly on August 5, 2025. 

Speaker of the National Assembly Moses Wetang’ula  urged the Departmental Committee on Energy and the Select Committee on Public Debt and Privatisation to "expedite the joint consideration of the Sessional Paper and table a report to the House, to enable its consideration." 

With the Treasury facing persistent fiscal pressures and a growing public debt burden, the sale of a stake in this strategic monopoly is seen by Treasury mandarins as a vital avenue to raise non-debt financing and demonstrate commitment to economic reforms.