The National Oil Corporation of Kenya (NOCK) has received a lifeline following the approval of Sh1.535 billion to settle its financial obligations.
The funds, allocated to repay a KCB Bank loan and support recurrent expenditure, are part of efforts to stabilise the state-owned corporation amid ongoing financial challenges.
In a letter dated 24th December 2024 and addressed to Mohamed Liban, the Principal Secretary for the State Department for Petroleum, NOCK confirmed the allocation.
The corporation expressed gratitude to the Ministry of Energy and Petroleum for facilitating the timely intervention.
Breakdown of financial allocation
According to the letter, the approved amount includes Sh1.215 billion for the repayment of a KCB Bank loan and S h320 million for recurrent budgetary support in the Financial Year 2024/25.
We request that the Sh1.535 billion be transferred to the Corporation’s KCB Bank Kenya Ltd bank account whose details are as provided here below.
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This financial boost is expected to enhance NOCK’s operational efficiency and ensure the continuity of its services during the fiscal year.
NOCK’s financial struggles
The disbursement comes at a time when NOCK is grappling with severe financial instability.
An audit by Auditor-General Nancy Gathungu revealed that the corporation’s liabilities exceed its assets by Sh9.1 billion, raising concerns about its solvency.
The audit for the year ending June 2023 detailed a negative working capital position, with liabilities of Sh11.46 billion against assets of Sh2.34 billion.
Accumulated losses stood at Sh6.84 billion, while operational inefficiencies and an outdated strategic plan have further compounded the corporation's challenges.
Gathungu warned of the corporation’s precarious position, stating, “The corporation is technically insolvent, and its survival depends on improved performance and reduced reliance on financial support.”
The path to recovery
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In addition to settling its financial obligations, the corporation is under pressure to implement reforms aimed at operational efficiency and sustainability.
With a strategic investor seeking to revitalise NOCK, the approved funds represent a critical first step in addressing its immediate challenges.
NOCK reiterated its appreciation for the government’s intervention, stating, “The National Oil Corporation remains grateful to the State Department of Petroleum and the Ministry for this very timely budgetary intervention towards our revival.”
This funding, coupled with ongoing reforms, is expected to provide a foundation for NOCK’s recovery as it navigates its financial hurdles.