State wraps up Sh6b NOC-Rubis deal

The plan to rescue the cash-strapped National Oil Corporation (NOC) has been finalised following the signing of a deal with Rubis Energy Kenya, which will inject cash into the State corporation.

The signing of the agreement overseen by Energy and Petroleum Cabinet Secretary Opiyo Wandayi follows the successful completion of the Specially Permitted Procurement Procedure (SPPP) for a non-equity strategic partner, in compliance with the Public Procurement and Asset Disposal Act, 2015.

CS Wandayi described the collaboration as a transformative step in strengthening NOC, enhancing its capacity, and creating long-term value for the citizens.

“With this renewed profitability, the corporation will be well-positioned to generate returns and, in the future, begin paying dividends to its shareholders,” he said in a statement.

Leparan Ole Morintat, Chief Executive & Managing Director NOC, highlighted the industry’s challenges, noting that the sector is highly complex and capital-intensive, requiring substantial investment and operational flexibility to stay competitive. He said, 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 revitalise the company and restore profitability. This process, initiated in 2019, has now culminated in the selection of RUBiS Energy Kenya as our non-equity strategic partner,” he said.

The partnership is a key component of NOC’s broader turnaround strategy, which aims to scale up its downstream operations and strengthen its position in the petroleum products trading and marketing space. NOC’s turnaround plan is designed to ensure the security of petroleum supply, stabilise fuel prices, and reduce the cost of living and doing business in the country. The partnership will also aid in clearing the parastatal’s legacy debts and improving financial sustainability. As a non-equity strategic partner, Rubis Energy Kenya will provide financial support, working capital financing, market development initiatives, and capital expenditure financing for the rebranding, rehabilitation, and expansion of NOC’s retail network.Previous reports estimate the deal between the two firms at Sh6 billion. 

The partnership also encompasses training, capacity building, skills transfer for NOC staff, the deployment of a new Enterprise Resource Planning (ERP) system to improve business processes and customer experience, and collaboration in the fuel card business to enhance customer engagement and service delivery.