Cabinet approves privatization of Kenya Pipeline
The Cabinet on Tuesday, July 29, approved the return of Kenya Pipeline Company (KPC) to the privatisation programme.
The Cabinet on Tuesday, July 29, approved the return of Kenya Pipeline Company (KPC) to the privatisation programme.
The move has set the stage for the sale of part of the company’s shares to the public through the Nairobi Securities Exchange (NSE).
“The Cabinet gave the green light for the reinstatement of Kenya Pipeline Company (KPC) into the privatisation programme, paving the way for partial divestiture of government shares in a move aimed at democratising ownership by Kenyans at the Nairobi Securities Exchange and unlocking the company’s full commercial potential,” a report from the Cabinet read.
According to the report, the move is part of a policy shift by the government to reduce direct involvement in commercial enterprises and instead let private players take the lead.
“The decision reflects the government’s policy shift toward reducing its role in doing business and instead enabling the private sector and industry experts to drive growth, efficiency, and innovation,” the report added.
The Cabinet noted that although KPC is profitable, it is yet to achieve its full market potential due to management challenges in the public sector.
“KPC, a strategic player in Kenya’s energy supply chain, has maintained a strong profitability record and holds significant asset value. However, the Cabinet noted that the company has not yet reached its optimum performance and market value, largely due to bureaucratic constraints and public sector inefficiencies.
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“Bringing in private capital and professional expertise is expected to inject new energy into the company, modernise operations, and position KPC as a regional logistics and energy powerhouse,” the report further read.
The Cabinet also pointed out cases where privatisation improved the performance of state-owned enterprises.
“Cabinet was reminded that similar moves in the past have yielded transformative results. Safaricom, Kenya Commercial Bank, and KenGen are prime examples of formerly State-controlled entities that became high- performing companies following privatisation, driving shareholder value, expanding regionally, and creating thousands of jobs.
“The divestiture of KPC is expected to follow this path, boosting investor confidence and supporting the development of Kenya’s capital markets,” the report stated.
KPC was established in 1973 and began its commercial operations in 1978.
It operates under the Ministry of Energy and is largely owned by the National Treasury, which holds approximately 99.9% of the company’s shares.
The Ministry of Petroleum and Mining holding the remaining 0.1%.
KPC is responsible for transporting refined petroleum products across the country through a pipeline network that stretches from Mombasa to cities such as Nairobi, Nakuru, Kisumu, and Eldoret.
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