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Treasury to raise Sh100 billion from selling Kenya Pipeline
The National Treasury Building in Nairobi.
The National Treasury expects to raise approximately Sh100 billion from the privatisation of the Kenya Pipeline Company (KPC) shares through an initial public offering at the Nairobi Securities Exchange.
The Treasury says the proceeds from the KPC sale will be used to fund priority public services and infrastructure.
A Sessional Paper on the Privatisation of Kenya Pipeline Company through an Initial Public Offering (IPO), tabled in the National Assembly, shows that the proceeds of the sale will enable the government to raise funds budgeted for in 2025/26, to implement economic and social objectives.
The Treasury paper, tabled on Tuesday, May 5, 2025, says the proceeds from the transaction will support critical development priorities, reduce reliance on borrowing, and deepen Kenya's capital markets.
The Treasury expects the National Assembly to approve the detailed proposal for KPC privatisations by end of this month and implementation of the same by the Privatisation Commission by end of September, 2025.
“The National Treasury expects to raise approximately Sh100 billion from the transaction,” John Mbadi, the Treasury Cabinet Secretary said in the Sessional Paper.
“In compliance with Section 24 of the Privatisation Act, the National Assembly is requested to consider and approve the proposal to implement the privatisation of Kenya Pipeline through an Initial Public Listing (IPO) in the Nairobi Securities Exchange to raise resources to implement the 2025/2026 budget,”
He said theproposed privatisation balances economic empowerment, national interest, and institutional modernisation in a manner that will benefit both the public and the economy at large.
Mr Mbadi said the transaction advisors in the IPO will be compensated through a combination of fixed fees, payable for due diligence and structuring, and success fees linked to the successful completion of the offering.
He said the transaction advisors will also receive commissions for underwriting or placement roles and reimbursement of approved expenses.
“The fixed fees and public participation costs will be approximately Sh100 million. All the other fees will be paid from the proceeds of the IPO, which will be paid net of these costs,” Mr Mbadi said.
Mr Mbadi said the national benefits accruing from the proposed transaction include raising revenue required to implement the 2025/26 budget to fund critical economic and social requirements as approved by Parliament.
He said the proposed restructuring of KPC shares will enhance Kenya's regional competitiveness, investment and economic growth.
“The national benefits accruing from the proposed transaction include improved efficiency in the delivery of services through mobilisation of private sector financial and management resources,” he said.
“Expanded capacity through mobilisation of private sector capital and management resources.
Strategic opportunity
Mr Mbadi ruled out any job losses arising from the privatisation of KPC, arguing that the current level of staffing and organisational structure does not require any organisational restructuring prior to privatisation.
He said the privatisation of KPC through a public offering of shares presents a strategic opportunity to unlock the company's full potential while ensuring broad national benefits.
“It will empower ordinary Kenyans to own a stake in one of the country's profitable and strategic enterprises, promote inclusive economic growth, and strengthen transparency and corporate governance through stock exchange listing and regulatory oversight.”
He said the inclusion of an Employee Share Ownership Plan (ESOP) will ensure that staff share in the company's future growth.
Mr Mbadi added that the participation of the private sector will enhance operational efficiency and innovation, while the government retains a strategic role to safeguard national interests and energy security.
The Privatisation of Kenya Pipeline Company Limited was included in the Privatisation Programme approved by the Cabinet in December 2008 and gazetted on August 14, 2009 to facilitate mobilisation of resources for additional investments, enhancement of transparency and corporate governance, broadening of shareholding in the economy, development of the Capital Markets and raising of resources to support the government budget.
Mr Mbadi said the privatisation proposal is prepared in line with the provisions of Section 23 of the Privatisation Act, 2005 which requires that for each of the transactions in the approved Privatisation Programme, a specific proposal for privatisation be prepared for approval by the Cabinet and submitted to the National Assembly for consideration and approval.
The Kenya Pipeline Company (KPC) was established in 1973 as a state corporation to provide an efficient, safe, and cost-effective means of transporting and storing petroleum products. The company started commercial operations in 1978.
The Treasury said the primary objectives were to reduce reliance on road and rail transport, lower fuel transportation costs, enhance energy security, and support regional petroleum trade.
“KPC's strategic pipeline and depot infrastructure were designed to facilitate domestic fuel supply and serve neighbouring countries, positioning Kenya as a key player in regional energy logistics,” Mr Mbadi said in a memorandum to Parliament.
“The company is wholly owned by the government of Kenya, with 99.9 percent shareholding held by the National Treasury and about 0.1 percent by the Ministry of Energy and Petroleum.”
The KPC maintains an extensive pipeline network spanning 1,342 kilometres, and in the financial year 2023/24, reported Sh35.4 billion in revenue and a Profit After Tax of Sh6.9 billion, contributing dividends to the National Treasury.
The Treasury said the KPC supports over 2,000 direct employees and hundreds of local suppliers and contractors, thereby supporting local content development.
