The National Oil Corporation of Kenya (Nock) has started repaying the Sh7.53 billion loan tapped from KCB Group more than a decade ago, as the firm seeks to unshackle itself from debts.
A letter seen by the Business Daily shows that Nock wrote to the Ministry of Energy and the National Treasury for release of Sh1.535 billion, where Sh1.215 billion was to make the first payment of the KCB loan.
Nock tapped a Sh4.69 billion loan from KCB more than a decade ago to fund expansion and operations but perennial losses made it impossible to service the debt, leading to accumulation of penalties and interest.
“We request that the Sh1.535 billion be transferred to the corporation’s KCB Bank Kenya account whose details are as provided below,” Antony Gatehi, the Credit Controller at Nock, wrote in a December 24, 2024 letter to the Ministry of Energy last month.
He added that Sh1.215 billion out of the Sh1.53 billion will be used to make the first payment of the KCB loan. A source told this publication that the two ministries have since wired the money.
Mr Gatehi said in the letter that the remaining Sh320 million are grants for Nock’s recurrent budget in the financial year ending June 2025.
He wrote the letter on behalf of Nock CEO Leparan Morintat.
Accumulation of penalties and interest pushed the loan from Sh4.69 billion to Sh7.53 billion as at June last year as the National Treasury and Energy ministry delayed the much-needed financial intervention.
Nock intended to use the two loans to fund operations including fuel purchases decades ago when it sought to ward off competition from local and foreign owned oil marketing firms.
The KCB loan is one of the two bank debts that Nock has struggled to start repaying amid the piling losses. The State-owned oil marketer also has an unpaid Sh2.58 billion loan that it tapped from Stanbic Bank.
It remains unclear on whether the marketer has also started repaying the money owed to Stanbic. The initial loan was Sh1.3 billion but accumulation of penalties and interest for the defaults pushed it to Sh2.58 billion as at June last year.
KCB Group had in 2021 threatened to seize and auction Nock’s assets to recover the billions. But the lender did not make good its demand notice, offering the loss-making firm a lifeline.
The two loans were last year cited as hurdles in Nock’s efforts to onboard a strategic partner as part of its revival plan.
Members of Parliament had early last year given the Ministry of Energy and National Treasury 30 days to come up with a plan on how the loans would be cleared to pave the way for Nock to strike a deal with a strategic partner.
Nock is inching close to a deal with Rubis, in what will see the French oil marketer pump at least Sh6 billion in the business. The two will share profits in a ratio which is yet to be disclosed, allowing Rubis to recoup its investment.
