CS CHIRCHIR-TAKEOVER OF KPRL ASSETS BY KENYA PIPELINE COMPANY

The take-over of the Kenya Petroleum Refineries Limited assets by the Kenya Pipeline Company will facilitate Kenya Pipeline Company to expedite its operations which are focused on pipelines and storage capacity for petroleum and petroleum products in the country and the region.

Energy and Petroleum Cabinet Secretary Davis Chirchir said  that  besides enhancing the storage capacity of petroleum and its products, the take-over will accelerate the proliferation of per capita use of Liquefied Petroleum Gas (LPG) through the development of LPG bulk import handling and storage facilities at the Kenya Petroleum Refineries Limited storage tanks in Changamwe, Mombasa.

Chirchir spoke  during the Share Transfer Agreement Signing Ceremony on the Acquisition of Kenya Petroleum Refineries (KPRL) by the Kenya Pipeline Company (KPC) at the National Treasury in Nairobi said the acquisition will aid in the upgrade, rehabilitation of Kenya Petroleum Refineries Limited and push the planned capacity enhancement of the pipeline system throughout the Country besides increasing the storage capacity for the country.

The CS further said the take-over will also enhance and position Mombasa as the dominant trading hub in East Africa and help to manage petroleum and petroleum products price hikes in the local market.

Chirchir added that the acquisition is therefore expected to enhance petroleum supply chain infrastructure and thereby result in security of supply and cost-efficiency through reduced demurrage costs.

The acquisition, Chirchir added,  is also aimed at enhancing efficiency as well as foster synergy in the petroleum value chain by optimizing the use of existing downstream petroleum infrastructure.

"The acquisition of Keya Petroleum Refineries Limited by Kenya Pipeline Company is symbiotic. It is envisaged that the financial performance of both institutions will improve. Moreover, the operationalization and growth of KPRL under the new shareholder will bring social and economic benefits to the coast region and to Kenya at large" the CS said.

He further explained that the  Kenya Petroleum Refineries Limited facilities are leased by Kenya Pipeline Company who operate and manage the facility and the the acquisition therefore changes the arrangement in that Kenya Pipeline Company shall own Kenya Petroleum Refineries Limited.

 KPRL , Chirchir noted ,shall remain a legal entity as a subsidiary of KPC and in line with the Kenya Kwanza agenda of jobs creation, there shall be no loss of employment because of this acquisition.

"You may wonder why the Government has approved the change from leasing to ownership through share transfer, yet the leasing arrangement was working. Under the lease arrangement, the operations of the lease were limited in certain respects, necessitating the Government to convert KPRL as a subsidiary of KPC to facilitate enhanced operations and seamless management", said the CS.

Chirchir noted that among the objectives of the State Department for Petroleum is to ensure security of supply of petroleum products and the Ministry is committed to ensuring that the acquisition ensures business continuity and furtherance of the mandate of KPC to grow revenues and business diversification to support the national development Agenda.

He said it is therefore incumbent upon the parties concerned to continue collaborating in the next steps of the completion of the share transfer process and management of post-acquisition activities.  I look forward to seeing the takeover responds to the expectations and start bearing fruits and become a success story in the days to come.

"The Kenya Petroleum Refineries Limited and Kenya Pipeline Company are limited liability companies wholly owned by the Government of Kenya. and following the Cabinet approval of the acquisition of Kenya Petroleum Refineries Limited by Kenya Pipeline Company on 18th July 2023 by way of share transfer, my Ministry adopted a multi-disciplinary approach and set up a Steering Committee to implement the Cabinet approval on the takeover", Chirchir declared.

He added that the Steering Committee has prepared the Share Transfer Agreement and other attendant transfer instruments which have been signed and lauded the Steering Committee and its Technical team for working tirelessly to ensure the acquisition process has been successful to this point.

Speaking during the handover ceremony, the National Treasury Cabinet Secretary Prof. Njuguna Ndung'u said the Government through the National Treasury is transferring 100 per cent of its shares held at KPRL to KPC without any monetary consideration.

Prof Ndung'u said that the signing of this Share Transfer Agreement is to formalize and deepen the governance and operational relationship between KPC and KPRL hence creating a subsidiary- parent relationship between the two state corporations.

"Indeed, the resilient and excellence performance of KPC since inception, gives us the confidence that this take-over will produce a robust, virtuous and value creating business model between the two state corporations", Prof. Ndung'u asserted.

During the transition period, the CS noted, KPC should carefully evaluate and determine the long-term mandate and existence of KPRL, and pledged to ensure that the National Treasury will guide and support all efforts towards achievement of this goal.

He added that the Government therefore expects KPC to therefore seize this opportunity to consolidate its business leadership in the region and maximize value to the shareholder, employees, and society at large.

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