KAMPALA, Feb. 24 (Xinhua) -- The Ugandan government has approved its state-run oil firm to acquire a 20.15 percent stake in the Kenya Pipeline Company (KPC) ahead of its planned initial public offering (IPO), a senior official said Tuesday.
Ruth Nankabirwa, Uganda's minister of energy and mineral development, told reporters that the Cabinet on Monday authorized the Uganda National Oil Company (UNOC) to participate in the KPC IPO.
Nankabirwa said the investment is critical because UNOC, the sole importer of petroleum products destined for Uganda, relies on the KPC to transport fuel from the Kenyan seaport of Mombasa to western Kenya, from where it is forwarded to Uganda. Imports routed through Kenya account for more than 95 percent of Uganda's monthly fuel demand -- about 2.96 billion liters annually -- while the remaining 5 percent is imported via neighboring Tanzania, according to official figures.
She noted that when the KPC was fully owned by the Kenyan government, Uganda depended on strong bilateral ties to ensure reliable and secure fuel supplies. With the divestiture, however, private investors could have divergent interests that might disrupt supply security.
"It was therefore important for the government of Uganda, through UNOC, to maximize its shareholding in the KPC, due to the company's criticality, and to secure additional guarantees and protections to manage the inherent conflict arising from the divested shareholding," she said.
"Therefore, the IPO and subsequent trading of KPC shares on the Nairobi Stock Exchange (NSE) are of significant strategic importance to the country, both from an energy security and a commercial perspective," she added.
Nankabirwa said Kenya granted Uganda several concessions during negotiations to safeguard its strategic interests in supply security, affordability, and accessibility. These include the 20.15 percent shareholding and veto powers over changes to pipeline tariffs, dividend policy, share capital, the company's business plan, and any amendments to its memorandum or articles of association.
Kenya plans to partially privatize the KPC by listing it on the NSE, retaining a 35 percent stake while offering the remaining 65 percent to the public. ■
