A National Oil filling station. FILE PHOTO | NMG
Summary
- Documents tabled in Parliament show that the State agency’s losses will more than triple from the Sh300 million recorded the previous year—complicating matters for the firm already staring at a possible seizure and auction of its assets to pay Sh5.3 billion in defaulted loans.
- The anticipated loss is linked to a sharp decline in fuel sales that squeezed its revenues.
- Nock’s fuel sales declined to 124.8 million litres in the period under review, representing a 61.3 percent of the 322.8 million litres a year earlier.
The debt-ridden National Oil Corporation (Nock) projects a Sh1.44 billion loss for the year ended June 2020 after it sank deeper into financial turmoil.
Documents tabled in Parliament show that the State agency’s losses will more than triple from the Sh300 million recorded the previous year—complicating matters for the firm already staring at a possible seizure and auction of its assets to pay Sh5.3 billion in defaulted loans.
The anticipated loss is linked to a sharp decline in fuel sales that squeezed its revenues.
Nock’s fuel sales declined to 124.8 million litres in the period under review, representing a 61.3 percent of the 322.8 million litres a year earlier.
Nock managing director Leparan Gideon Morintat told Parliament that the agency was betting on capital injection from the Treasury to pay off the bank loans and an additional Sh628 million to offset supplier pending bills.
The projected loss piles more pressure on the State corporation to meet its debt obligations even as two local banks threaten to seize and auction its assets to recover the loans.
KCB in August demanded full settlement of itsloan in 30 days, failing which it would institute recovery measures.
Mr Morintat two weeks ago told the Senate Energy committee that KCB had commissioned liquidity and an independent business review on the corporation in April 2020.
“In a letter dated August 13, 2020, a week before receiving the final draft IBR (Independent Business Review) report, the bank issued a demand for full settlement of the loans in 30 days i.e. by September 12, 2020, failure to which they will institute recovery measures,” Mr Morintat told the Senate Energy committee.
“This is a real threat and should nothing be done by the shareholder, then Nock may be wound up.”
Nock owed KCB Sh3.67 billion in principal loan and an interest of Sh 147.94 million as at August 31, 2020.
It also owes Stanbic Bank Sh1.29 billion in principal loan and an interest of Sh162.12 million. Nock has also failed to pay suppliers Sh628 million.
Nock is proposing that shareholders inject Sh3 billion for its working capital in the year to next June.
The managing director said Nock had not received its budgetary allocation and grants for the first quarter of the current financial year.
Mr Morintat also said that the agency had not accessed grants from the government of Sh745 million that is held in a fixed deposit account at KCB.
The revelation of the agency’s dire financial state saw members of the National Assembly committee on Energy differ sharply on whether to adopt Nock’s financial books.
Three members of the Energy committee accepted the report but two disagreed and instead demanded that an independent audit report on liquidity and internal business review of the corporation be tabled before any report can be adopted.
Fafi MP Abdikhaim Osman and his Kilifi South counterpart Ken Chonga walked out of the meeting claiming the committee was compromised.
The Fafi lawmaker had in July written to Petroleum Principal Secretary Andrew Kamau alleging corruption involving top Nock officials.
“As a member of the Energy committee, I have received numerous complaints regarding claims of under-hand and non-procedural undertakings,” Mr Abdikhaim said in the letter also copied to the Ethics and Anti-Corruption Commission and the Director of Criminal Investigations.
emutai@ke.nationmedia.com
jmutua@ke.nationmedia.com
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