The Treasury has cut the State's vice-like grip on Kenya Pipeline Company (KPC) weeks after sealing a 65 percent initial public offering that saw the energy utility’s ownership change to private hands.

In a gazette notice dated 22 April, the Treasury Cabinet Secretary John Mbadi revoked the designation of KPC as a state-owned entity with its new identity becoming Kenya Pipeline Company Public Limited Company (KPC PLC). 

CS Mbadi said East Africa's primary fuel artery has turned a private enterprise according to the provisions of the Privatisation Act No. 18 of 2025.

The utility's remaining 65 percent shares now float freely on the main investment market segment of the Nairobi Securities Exchange (NSE) where they were on-boarded on 10th March, this year.

CS Treasury's move effectively removes KPC from Schedule II of the Declaration of National Government Entities under legal notice No. 33 of 2015. 

This means that KPC is no longer tied by strict budget controls from the National Treasury especially on procurement and borrowing undertakings. 

Additionally, going forward, its assets cannot be classified as national government property when undertaking fiscal reporting.

“The privatisation was implemented through an Initial Public Offer of 65 percent of its issued ordinary share capital,” noted Jane Rose Omondi, the acting CEO of the Privatisation Authority, in Gazette Notice No. 5804. 

She added: “Following finalisation, the Government of Kenya through the Cabinet Secretary to the Treasury now holds 35 percent of the issued share capital of KPC.”

KPC distribution centres

Utility KPC was registered in Kenya in 1973 as a private limited liability company and a wholly owned entity of the government of Kenya. The fuel transporter started operations in 1978.

Since then, KPC has served the East African region, transporting refined petroleum products from the Port of Mombasa to key distribution centres of Nairobi, Eldoret and Kisumu.

For nearly five decades, KPC has been particularly instrumental in ensuring fuel supply stability in neighbouring Uganda, Rwanda, Burundi, South Sudan and to buyers in eastern Democratic Republic of Congo

Currently, KPC runs a pipeline of roughly 1,200 kilometres in length all fed by its strategic storage depot, Kipevu Oil Terminal, in Mombasa County.

As part of growing its income streams, the utility has been venturing into the deployment of fibre-optic infrastructure along the pipeline to tap into Kenya's digital economy.

Under the 2025 Privatisation Act, the government was required to seek parliamentary approval for any disposal of a state-owned entity classified as strategic. 

KPC initial public offering, which had been flagged in the National Treasury’s 2024–2028 Privatisation Programme, received approval in late 2025, triggering its transition from a private limited company to a public limited company.

This shift in ownership was part of the prerequisites for its listing by initial public offering at the Nairobi bourse, which was oversubscribed by roughly 2.4 times, driven by local pension funds, regional institutional investors and a small allocation to retail buyers. 

Pre-IPO valuations by the Privatisation Authority placed KPC’s enterprise value at approximately KSh120 billion.

How transition impacts reporting

The National Treasury's move under Legal Notice No. 72 carries with it significant implications for the oil transporter particularly on governance and financial reporting.

Previously, KPC was bound by the Public Finance Management Act guidelines on borrowing, disposal of assets and annual submission of budget to the National Treasury. 

Additionally, its accounts were part of the national government's consolidated financial statements. Operationally, the President used to appoint its Board of Directors upon the recommendation of CS Treasury.

With that status now revoked, KPC PLC has transitioned into commercial entity, albeit with the state holding a 35 percent minority stake. Going forward, KPC PLC will be bound by regulations and controls of the Capital Markets Authority (CMA) on disclosure of both financial and governance issues.

What's more, the company's Board of Directors will be accountable primarily to all shareholders, and not the executive branch of the government of Kenya.

Additionally, Kenya Pipeline will no longer be a direct recipient of funding from the exchequer especially on capital projects. Instead, KPC PLC must now roll out plans to raise debt or equity from the financial markets according to the prevailing commercial terms.

This shift is poised to inject a market discipline on the new-look enterprise, which has previously fought criticism for opaque contracts and tariff setting.

Political and market reactions

President William Ruto's administration has made privatisation a key agenda in driving Kenya’s fiscal consolidation strategy under the 2025–2027 IMF programme, which calls for reducing state-owned enterprise liabilities that had ballooned to over 6 percent of the GDP. 

Since assuming power in 2022, Dr. Ruto singled out KPC a top candidate for government divestiture, an undertaking that previous administrations hesitated citing its strategic value.

KPC PLC’s new board, which is expected to be elected at the first post-IPO annual general meeting in June 2026, will face immediate pressure to raise pipeline tariffs to commercial levels, currently among the lowest in East Africa, while managing the question of rising fuel prices.

The company has also signaled plans to expand its capacity from Mombasa to Nairobi and build a new spur line to Juba, South Sudan, requiring an estimated $400 million in financing. 

However, with no Treasury financing guarantees in the pipeline, KPC PLC will need to enter into the international financial markets to achieve its strategic objectives.

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