Regional oil marketer KenolKobil turns to three key depots for funds,
seeks dialogue to end raging disputes with rivals and oil refinery.
FILE/TEA Graphic
Nation Media Group
By KENNEDY SENELWA Special Correspondent
In Summary
- The firm is selling its depots in Kisumu, Eldoret and Sagana to raise money to settle expensive debts as it continues to search for a new strategic investor.
- In a research note, Standard Investment Bank said the move could help the oil marketer improve its cash flow and reduce borrowing, while pursuing other options including taking on potential long term strategic investors.
- The new CEO, David Ohana, is expected to oversee the process of retiring expensive debts of KenolKobil, restructuring of the firm to improve its cash flow, and the evaluation of potential business partners.
Regional oil marketer KenolKobil has put some of
its assets in Kenya up for sale, in a fresh bid to overturn its
fortunes that have dwindled over the past two months, following disputes
with rivals and the oil refinery.
The firm is selling its depots in Kisumu, Eldoret and Sagana to raise money to settle expensive debts as it continues to search for a new strategic investor.
This week, South African-based firm Global Credit Ratings downgraded the oil marketer’s long-term debt rating to an A with a negative outlook, from an A+ given last year.
KenolKobil owes the Kenya Petroleum Refineries Ltd Ksh1.2 billion ($14.4 million). Late last month, Kenya’s Ministry of Energy suspended KenolKobil from the competitive open tender system as a buyer and seller, over the refinery debt and failure to lift 19,610 tonnes of fuel produced by the plant in Mombasa.
The suspension means that KenolKobil cannot access cheaper refined fuel.
Discussions
On Friday, KenolKobil and the refinery’s top
executives were said to have met in Nairobi to resolve the dispute.
Sources said the oil firm promised to pay the outstanding debt.
Also discussed in the meeting, sources said, was a case in which KenolKobil is demanding Ksh3.1 billion ($36.5 million) from the refinery.
On June 5, KenolKobil sued the refinery demanding Ksh1.9 billion ($22.35 million) for not releasing its petroleum stocks, and Ksh1.2 billion ($14.11 million) for loss of business after the former failed to deliver 15,000 tonnes of the gasoline blending product TOPS in a deal entered into last year.
Sources said the firm was receiving selective bids from multinationals. Depots in Mombasa and Nairobi, which are jointly owned with Total, are not targeted.
The KenolKobil management declined to comment on the sale.
In a research note, Standard Investment Bank said the move could help the oil marketer improve its cash flow and reduce borrowing, while pursuing other options including taking on potential long term strategic investors.
“This is with a view to securing and growing long-term shareholder value. This follows termination of discussions with Puma Energy. Management did not declare a dividend for the year (2012),” said Standard Investment.
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