The Kenyan government expects to raise about KSh 106.3 billion from the sale of a 65 percent stake in Kenya Pipeline Company, providing a rare source of non-debt financing as it confronts a large FY2025/26 funding gap amid delayed external support.
- •According to the Information Memorandum, all proceeds from the IPO will accrue to the National Treasury and form part of the approved financing plan for the current fiscal year, as the State reduces its ownership in the fuel transporter ahead of a planned March listing on the Nairobi Securities Exchange
- •Kenya’s FY2025/26 budget projects total expenditure of about KSh 4.2–4.3 trillion against expected revenues and grants of roughly KSh 3.3–3.4 trillion, leaving a fiscal deficit of about KSh 923–932 billion, equivalent to around 4.8 percent of GDP.
- •Treasury documents show the gap is set to be financed largely through net domestic borrowing of about KSh 635.5 billion and net external borrowing of roughly KSh 287.7 billion.
External financing pressures have intensified following the expiry of Kenya’s $3.6 billion IMF programme in April 2025, with negotiations for a successor arrangement still ongoing. Budget documents for FY2025/26 exclude IMF financing, increasing reliance on domestic debt markets and alternative funding sources. Officials and analysts have warned that delayed or foregone IMF support constrains fiscal space and raises the importance of asset sales and other non-debt financing measures.
The Bigger Picture
The Kenya Pipeline IPO forms part of a broader shift toward monetizing State assets to support budget execution without adding to the public debt stock. The transaction involves the sale of 11.81 billion existing shares at KSh 9.00 per share, with no new shares being issued. Structured strictly as an offer for sale, the IPO will not inject capital into Kenya Pipeline and leaves the company’s balance sheet unchanged, with all proceeds flowing directly to the Exchequer.
The Kenya Pipeline sale sits alongside other planned asset monetizations, most notably the government’s proposed partial divestiture of its stake in Safaricom PLC. Treasury officials have said proceeds from the Safaricom sale are earmarked for a National Infrastructure Fund, intended to finance priority projects in energy, transport, water, and digital infrastructure. The structure is designed to ease pressure on the development budget and reduce reliance on both borrowing and direct Exchequer funding for large capital projects.
Following the Kenya Pipeline IPO, the National Treasury will retain a 35% stake, subject to a 24-month lock-in period approved by Parliament through Sessional Paper No. 2 of 2025, during which the remaining shares cannot be sold, transferred, or diluted. Upon completion of the IPO, Kenya Pipeline will cease to be classified as a State corporation, exiting the State Corporations Act framework. The government will no longer be the controlling shareholder, with oversight shifting to the Capital Markets Authority and the Nairobi Securities Exchange under the Companies Act.
Together, the Kenya Pipeline IPO and the Safaricom divestiture signal a fiscal strategy that leans more heavily on domestic resource mobilization and asset recycling to fund development spending at a time of constrained external financing. The approach allows the government to support infrastructure investment while containing growth in public debt and managing liquidity pressures in the domestic bond market.
Trading in Kenya Pipeline shares is scheduled to begin on March 9, 2026, subject to regulatory approvals and completion of the offer process. The listing marks a structural shift in how the State finances its budget, substituting part of its borrowing requirement with proceeds from commercial asset sales as Kenya navigates a tighter global and domestic funding environment
