Mystery over Kenya Pipeline valuation deepens as treasury fails to submit latest figures

The mystery surrounding the actual value of Kenya Pipeline Corporation continues to deepen ahead of its planned sale, with members of Parliament warning that the figure in the public domain may not be the current valuation.    

This is after Treasury Principal Secretary Chris Kiptoo on Wednesday failed to provide a clear current valuation for the Kenya Pipeline Company (KPC), leaving MPs questioning the basis for a planned partial privatisation.

Appearing before the Energy and the Committee on Public Debt and Privatisation,  Kiptoo said the latest audited financial statements place KPC’s book value at about Sh120 billion.

However, he admitted that no updated independent market valuation had been carried out ahead of the planned sale, and that such an exercise would only take place after Parliament approves the transaction.

This raised concerns from the lawmakers over whether the government could justify its revenue target for the transaction without a fresh appraisal.

The lawmakers warned that proceeding without a current market valuation risked undermining public trust in one of the Kenya Kwanza government’s flagship privatisation deals.

Kinangop MP Zachary Kwenya questioned how the government could seek to raise more from the deal, yet the company is valued at Sh120 billion.

“Has actual valuation been done within the last three years? Including an appreciation of assets because some appreciate and there are those that are depreciating. That is what we are looking at. Based on that, we will be able to know the true value of KPC,” said Kwenya.

Lawmakers questioned the credibility of seeking Sh149 billion from a company whose last stated value is significantly lower.

“We cannot proceed based on book value alone,” said Baringo North MP Joseph Makilap, calling for the most recent valuation report to be tabled before any sale.

Ijara MP Abdi Ali Abdi further pressed Kiptoo on the fate of the government-to-government (G-to-G) fuel import arrangement should KPC pass into majority private ownership.

“We have what is called G2G model of fuel importation in this country. What will be the fate of the government-to-government fuel tender,” asked Abdi.

While maintaining that the deals such as G-to-G will still hold, Kiptoo assured MPs that Kenyans and regional partners, including Uganda, could be given preferential access to shares, with the Privatisation Commission responsible for setting the allocation criteria.

“There will be an allocation criterion, after you approve it, the privatisation commission will work on the criteria on how to allocate on classes of investors, there will be those who are in the insurance industry, ordinary Kenyans that will be provided in the coursework,” said Kiptoo.

The legislators further sought clarity on whether private ownership, particularly by foreign investors, could dilute national control over key assets.

“We want to know how government agencies such as EPRA will still be regulating prices, if Uganda decides to buy the 50 per cent of the shares,” paused Kwenya.

Kiptoo in his defense argued that other state agencies have been privatised and yet the shareholders have not been influencing what happens in the market.

He maintained that the proposed sale, allowing the State to offload up to 65 per cent of its stake, would help plug budget deficits without increasing public debt.

However, the PS sidestepped repeated requests to confirm when KPC’s assets were last independently valued, promising only to provide the latest report before the sale proceeds.

The government has budgeted to raise Sh100 billion through privatisation this financial year to fund development priorities and settle part of the Sh571 billion in verified pending bills.

KPC is among the flagship assets earmarked for the privatisation programme.