The prospect of Kenya Pipeline Company (KPC) listing on the Nairobi Securities Exchange (NSE) is gaining traction, marking a step in the government’s broader plan to attract private investment into key infrastructure assets.
- National Treasury Cabinet Secretary Hon. John Mbadi confirmed discussions on an Initial Public Offering (IPO) during an event at KPC’s Nairobi headquarters, where he received an interim dividend cheque of KSh 3 billion for the half-year ending December 2024.
- KPC’s potential listing is expected to inject fresh dynamism into Kenya’s capital markets, which have struggled with declining investor participation and low liquidity in recent years.
- If successfully executed, the listing would mirror the success of previous state-backed IPOs such as Safaricom and KenGen, which attracted substantial local and foreign investment.
“Listing KPC on the NSE will not only enable the company to raise capital for its regional expansion and LPG diversification plans but also deepen our capital markets by providing more investment opportunities for Kenyans,” said Mbadi.
Over the past year, KPC remitted a total of KSh 10.5 billion in dividends to the Treasury, making it an attractive candidate for public listing.
Government’s Privatization Agenda
The potential IPO is part of the Ruto administration’s wider privatization agenda aimed at offloading non-strategic state corporations to improve efficiency, attract investment, and ease the government’s fiscal burden.
The Privatization Act 2023, signed into law by President William Ruto, seeks to expedite the sale of state-owned enterprises by streamlining bureaucratic processes and allowing multiple divestment strategies, including IPOs and private placements.
Despite a strong policy push, the privatization program has faced delays, with several planned IPOs yet to materialize. Entities earmarked for privatization alongside KPC include National Oil Corporation, New Kenya Cooperative Creameries (NKCC), Kenya Literature Bureau (KLB), and Rivatex East Africa (REAL), among others. The slow pace of execution has been attributed to legal battles, political opposition, and concerns over the valuation of assets.
Privatization Hurdles
Opposition groups and civil society organizations have raised concerns over the privatization of strategic state enterprises like KPC. The Orange Democratic Movement (ODM), led by Raila Odinga, moved to court to challenge aspects of the privatization law, arguing that certain SOEs are of national security importance and should remain under government control.
Last year, the High Court ruled that the government must conduct further stakeholder consultations before proceeding with the sale of certain assets, including KPC. However, with opposition leaders now cooperating with the government, there is renewed optimism that privatization efforts will gain momentum in 2025.
The Case for KPC’s Listing
For the fiscal year ending June 2024, the company posted a Profit Before Tax (PBT) of KES 10.1 billion, a notable increase from KES 7.6 billion the previous year. Over the last decade, KPC has contributed KES 63 billion in taxes and dividends to the government.
KPC Chairperson Mrs. Faith Boinett attributes this success to operational efficiencies and revenue diversification. The company has expanded beyond fuel transportation, leveraging its vast pipeline infrastructure to provide fiber optic services and venturing into Liquefied Petroleum Gas (LPG) distribution.
Additionally, KPC is reinforcing its position as a regional leader in petroleum logistics. It currently controls 90% of fuel transportation to Uganda and is on the verge of securing a similar market share in Rwanda. The company is also exploring the establishment of a trading hub in Mombasa to facilitate petroleum imports and distribution across East Africa.
The listing of KPC could provide a much-needed boost to the NSE, which has struggled to attract new listings over the past decade. The IPO would not only increase market capitalization but also offer retail and institutional investors an opportunity to invest in a profitable state entity with a strong regional footprint.
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