The National Assembly has laid down stringent conditions to safeguard national interests and ensure transparency in the proposed plan to partially privatise the Kenya Pipeline Company (KPC).
Lawmakers say the steps seek to safeguard competition and prevent emergence of a monopoly.
As such, MPs want the privatisation of Kenya Pipeline structured to limit the mandate of the company to transporting and storing petroleum products.
They also want a guarantee that the company shall not venture into importation or sale of petroleum products.
Exemptions would only be allowed where there is prior approval from the Competition Authority of Kenya, the Energy and Petroleum Regulatory Authority and the National Assembly.
MPs, in the approval given through policy resolutions on Sessional Paper No 2 of 2025, acknowledge KPC as a strategic asset of critical national and regional significance.
Even so, the House resolved that it is suitable for privatisation, paving the way for the government to sell up to a 65 per cent stake through an Initial Public Offering (IPO) at the Nairobi Securities Exchange.
The government will be required to retain at least a 35 per cent shareholding in the privatised oil company, even as opposition teams expressed jitters over the sale.
President William Ruto’s Cabinet approved the sale process in July, holding that privatisation would "democratise ownership by Kenyans".
It also reasoned that the sale to private investors would, in the long run, unlock the company's full commercial potential by reducing bureaucratic constraints.
But mindful of past controversies, MPs have concluded that the privatisation be conducted within a complex web of safeguards.
MPs have also provided that the Privatisation Commission must implement measures to ensure broad ownership by Kenyan citizens, with specific provisions for the youth, women and persons with disabilities.
“The Privatisation Commission takes steps to safeguard against excessive concentration of shares in a single entity or related parties and shall set a maximum ownership limit for any one shareholder to help preserve broad-based ownership, promote market competitiveness and protect national and energy security interests,” the report says.
Furthermore, MPs have recommended that employees of KPC will be included in an Employee Share Ownership Plan (ESOP). “The process has to be aligned with national economic empowerment objectives as provided in the law.”
Lawmakers further want the commission to ensure the company's valuation is contained in the prospectus and that a separate "citizen-friendly" valuation report is publicised.
All liabilities, including pending lawsuits worth Sh5.75 billion and unresolved compensation claims, must be comprehensively assessed and disclosed before the IPO.
MPs also want the sale to factor in the unresolved compensation claims of Sh3.8 billion by residents of Makueni from the oil spill.
Parliament also wants a clear statement included in the prospectus on how Kenya Petroleum Refineries Limited, a subsidiary of KPC, has been financially evaluated and factored into the valuation.
MPs further want the Office of the Auditor-General to audit the entire process to ensure value for money, and that the Privatisation Commission must report each stage of the implementation to the National Assembly for continuous oversight.
The proceeds from the sale, projected to be Sh100 billion, are earmarked for development expenditure, settling pending bills or liability management.
Despite the parliamentary approval, the privatisation plan faces significant challenges.
The Treasury is currently battling a lawsuit in the High Court that seeks to nullify the proposed sale.
The Consumer Federation of Kenya (Cofek) filed a petition alleging a lack of transparency and genuine public participation.
Treasury has defended the process, stating it followed the requisite legal procedures and is an "innovative mechanism" to raise money for the government budget.
The ministry argues that a public offer is "the most transparent and fair process of privatisation". The court case is ongoing, and its outcome could determine the fate of the entire transaction.
INSTANT ANALYSIS
The conditional sale of the Kenya Pipeline Company represents a crucial moment, balancing the government's quest for efficiency and revenue against the imperative of protecting a strategic national asset. The journey from parliamentary resolution to a successful IPO is likely to be closely watched and hotly debated by investors, civil society, and the general public.
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