The Kenya Pipeline Company (KPC) faces headwinds in its Initial Public Offering (IPO) plan as over Sh10 billion lawsuits and claims stand in its way, threatening to dim the company’s value and dent investors’ confidence.
New details show that the petroleum transportation state company faces lawsuits valued at Sh5.75 billion and Sh3.8 billion compensation claims, uncomfortable revelations ahead of the government’s sale of a 65 per cent stake.
Treasury Cabinet Secretary (CS) John Mbadi proposed the privatisation of KPC to Parliament on July 31, 2025, through an IPO on the Nairobi bourse as part of a plan to raise Sh100 billion for the 2025/26 budget support.
Two Parliamentary committees looking into the KPC sale plan have called on Treasury to disclose all liabilities (debt and credit) and risks affecting its valuation, to enable assessment and their factoring into the transaction before proceeding with the IPO.
“The risks identified include pending lawsuits amounting to Sh5.75 billion and unresolved compensation claims worth Sh3.8 billion by residents of Makueni County due to historical grievances linked to pipeline operations,” a report by the committees said.
The National Assembly’s Energy and Public Debt & Privatisation Committees reckon that while the KPC is headed for a listing on the Nairobi Securities Exchange (NSE), there has not been full disclosure of the debts it owes different parties.
The Kenya Pipeline Company's head office in Nairobi.
Photo credit: File | Nation Media Group
The committees also note that stalled projects and the company’s funds held by third parties could be surrendered to its creditors, which would affect its valuation.
KPC owes an international firm, Zakhem International, Sh485 million after a court ruled in the private firm’s favour over a contractual dispute.
The committees also stated that the company could lose Sh400 million after a 220-kilometre pipeline project running from Mzima Springs in the Tsavo West National Park to coastal counties stalled.
The report cited “loss of approximately Sh400 million in the Mzima pipeline project due to stalled execution and procurement lapses and a garnishee order of Sh485 million in favour of Zakhem International following contractual disputes over the Line V project.”
The government projects to get Sh100 billion from the listing of KPC at the Nairobi bourse, use the money to fund projects and settle some domestic debts.
Treasury put forward the case for KPC listing as a move that would enhance market diversification at the NSE, “which is currently dominated by commercial banks and major listed companies such as Safaricom and EABL.”
KPC recorded a 12 percent growth in its revenues for the year to June 2025, earning Sh39.8 billion from the Sh35.4 billion the previous year.
KPC generates much of its revenue from transportation and storage of petroleum products, accounting for 95 percent of total income.
On August 15, 2025, the High Court issued conservatory orders temporarily halting the State’s plan to sell a 65 percent stake in KPC through an IPO, pending the determination of an application filed by the Consumer Federation of Kenya (Cofek) against the intended sale.
Justice Bahati Mwamuye during a court proceeding at Milimani Law Court on December 18, 2024.
Photo credit: Wilfred Nyangaresi | Nation Media Group
The court issued the conservatory order following transparency queries raised by Cofek and allegations of statutory breach.
The court order issued by Justice Bahati Mwamuye blocks the government from offering for sale, allocating, disposing of, transferring, or otherwise dealing with any shares of the KPC in relation to the contested privatisation plan.
