Kenya Pipeline Privatization Unlikely to Impact Fuel Prices

Treasury Cabinet Secretary John Mbadi has addressed public concerns regarding the privatization of the Kenya Pipeline Company (KPC). He stated that the process will not lead to increased fuel costs for consumers.

Mbadi made these remarks during an interview on NTV, clarifying the government’s plans for the proceeds from the divestiture.

Privatization and Fuel Prices

Mbadi emphasized that the privatization of KPC will not affect retail petroleum prices. Despite the sale, the government retains a 35 percent stake in KPC, maintaining significant decision-making power. Regulatory oversight from bodies such as the Energy and Petroleum Regulatory Authority (EPRA), the Competition Authority, the Nairobi Securities Exchange (NSE), and the Capital Markets Authority (CMA) will ensure robust governance. KPC does not directly sell fuel to consumers; its role is to provide efficient and cost-effective transportation of petroleum products.

Use of Proceeds

Mbadi clarified that funds generated from the divestiture of KPC shares, alongside those from other strategic parastatals like Safaricom, will not be used for salaries or to settle government debt. Approximately 90 percent of the funds will be directed to the National Infrastructure Fund (NIF) to finance commercially viable infrastructure projects. The remaining 10 percent will be allocated to a Sovereign Wealth Fund, designed to promote intergenerational wealth, infrastructure development, and economic stabilization.

National Infrastructure Fund (NIF)

The NIF will operate with the government providing an initial equity portion, typically around 25 percent, for each project. The remainder will be financed through private sector investment and loans. This model aims to complete long-term infrastructure projects without straining the national budget, freeing resources for other public services.

Sovereign Wealth Fund and Global Examples

Mbadi cited examples from Norway, Saudi Arabia, and China, highlighting how sovereign wealth and government-backed funds globally have successfully financed infrastructure and stabilized economies. He stressed the importance of trust, transparency, and ring-fencing of funds in Kenya’s approach, with the goal of converting mature government assets into long-term investments that benefit current and future generations.