NOC must generate its own cash, says Murungi

February 10, 2011

, NAIROBI, Kenya, Feb 10 – The Treasury is no longer funding the National Oil Corporation (NOC) but it has instead urged it to be innovative in its expansion plans.

Energy Minister Kiraitu Murungi told the parliamentary Committee on Energy that the company had delayed its expansion programs owing to resource constraints.

The Minister however said he had now challenged the State Corporation to enter into private partnerships and grow its stations base from the current 70 to at least 150.

"There are a number of Kenyan businessmen who have opened independent petrol stations. We are entering into an agreement so that NOC can supply them with materials," he said.

He added that they would launch an ambitious plan to partner with smaller dealers in remote areas in the country.

"There are many marketers in this country where there are no filling stations but you don\’t need a petrol station since one pump can serve the area. We are looking for such businessmen who would want to establish such pumps so that we can have partnerships," said the Minister.

Mr Murungi was appearing before the committee to defend the government\’s decisions to allocate at least 30 percent of national oil imports to NOC in a bid to control fuel prices and ensure constant supply of the commodity.

"I don\’t know why they (major oil marketers) want the 100 percent yet there is 70 percent for them to compete for.  In fact, in places like Malaysia and Indonesia the National Oil Company imports 100 percent of the total imports," he said.

"You have seen the Oil majors exiting when they think there is money elsewhere."

National Oil was incorporated in April 1981 under the Companies Act, Cap 481 and charged with participation in all aspects of the petroleum industry. The company has a 100 percent Kenya Government shareholding and was meant to stabilise prices in the country.

However for its first two decades, the company\’s growth was minimal operating only six stations. After coming into power in 2003 the NARC government revamped it helping it get to the current 70 stations.

"Previously NOC was neglected but you can see what the government of President Kibaki has done," he said.

Oil marketers have previously objected to what they termed as favouritism of NOC in the competitive sector. The marketers have opposed the funding of NOC and allocation of a third of oil imports.

Recently the minister also instituted price controls to reign in on the fluctuating prices.

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