The Kenya Pipeline Company (KPC) has announced an interim dividend payment of Ksh. 5 billion to the National Treasury for the financial year ended June 2023. The dividend payment follows a 21% increment in KPC’s profitability to Ksh. 7.6 billion in the financial year 2022/2023 compared to Ksh. 6.3 billion the previous year.
The announcement of the Interim dividend was made during a cheque handover ceremony held at KPC’s headquarters. Speaking at the ceremony, National Treasury Cabinet Secretary Prof. Njuguna Ndung’u commended the Ministry of Energy and Petroleum for its role in stewarding the sector noting that key parastatals in the sector continue to deliver a return on investment to taxpayers with KPC paying out the highest dividend to taxpayers.
“Most parastatal are still dependent on the National Government for their operations. This means that taxpayers have to incur an additional burden in supporting and bailing them out due to poor performance. It is however noteworthy that KPC continues to deliver positive results on an annual basis and remains a self-funded corporation that delivers a return on investment to its shareholders who are the people of Kenya. The Ksh. 5 billion in interim dividends is the highest dividend paid by any state corporation.” said Prof. Ndung’u.
On his part, Energy and Petroleum Cabinet Secretary Davis Chirchir congratulated KPC for its consistency in delivering positive returns to taxpayers noting that KPC plays a strategic role in ensuring the country’s fuel security and that of the wider East African Region is guaranteed.
“As KPC marks 50 years of service delivery to Kenyans and the wider East African Region, it remains the most profitable State Corporation with both strategic roles and revenue targets. KPC must continue to diversify its product offering while expanding its reach beyond our borders. Fuel security is a critical driver of the economy and that is why the government continues to invest in KPC by entrusting it with key assets. We recently concluded the full handover of the Kenya Petroleum Refineries Limited (KPRL) to KPC. This strategic decision is meant to enable KPC to enhance the petroleum supply chain infrastructure and thereby result in the security of supply and cost-efficiency through reduced demurrage costs.” CS Chirchir added.
The CS challenged KPC to leverage its existing infrastructure to boost efficiencies within the petroleum industry and generate additional cost savings that can be passed on to consumers. KPC plays a strategic role in ensuring access to petroleum products to neighbouring countries across East Africa including; Uganda, Rwanda, Eastern DRC, Burundi, South Sudan and Northern Tanzania. The recently launched Kisumu Oil Jetty (KOJ) cements Kenya’s strategic role to neighbouring countries through providing an efficient, safe and reliable mode of moving petroleum products.
In her remarks, KPC Board Chairman Faith Bett-Boinett said the Ksh5 billion interim dividends was passed via an AGM declaration two weeks ago and they are a reflection of KPC’s sound business fundamentals.
“We are paying from a position of strength not compulsion, bolstered by sound strategic decisions and operational efficiencies including cost-cutting measures” she said.
According to the chairman, business undertook deliberate cost containment measures that resulted in a 5% per cent savings equivalent to Kshs 1.8 billion. Additionally, the company made a Ksh 4 billion advance payment of a syndicated loan facility and the resolution of some legacy contractual issues are some of the steps that have strengthened KPC’s cash position.
KPC Managing Director Joe Sang noted the company is looking to diversify its product offering by leveraging on both its expertise in the oil and gas sector and its existing infrastructure.
“Apart from growing our normal transportation and storage of petroleum products, we are looking at growing other business streams such as our Fiber Optic Cable (FOC), Morendat Institute of Oil and Gas (MIOG) and investments in Liquefied Petroleum Products (LPG) in the next Financial Year (2023/2024). The measures are aimed at enhancing the company’s resilience to overcome the volatile future. We are also placing additional emphasis on the export markets across East Africa and are working to fully operationalize and exploit the Kisumu Oil Jetty to make KPC the most cost-effective and competitive transporter of petroleum products across the region.” Mr. Sang added.
KPC has a dividend policy of paying 30% of its profit after tax (P.A.T) but has consistently surpassed the threshold while maintaining operations and complying to the prescribed lending/ loan covenant ratios. Cumulatively, KPC has paid Ksh46 billion in dividends to the government over the last six years.
Beyond its operations within the oil and gas sector and as part of its commitment to the government’s environmental and sustainability agenda, KPC has partnered with the Kenya Forest Service in planting over 441,800 mangroves on 50 acres of land as part of its 50th anniversary activities. The mangroves tree cover has significantly improved the lives of the local community. The increase in fish stocks and the benefits to beekeeping are just a few examples of the positive outcomes from this initiative.
Last week, KPC was recognized with an award for Best State Corporation on PWD Inclusion. The KPC Foundation received an award for The Most Inclusive CSR Initiative. Additionally, KPC CEO, Mr Joe Sang, was awarded the DIAR Award for C-Suite Executive. The award ceremony, which is in its sixth edition, celebrates individuals and organizations that champion diversity and inclusion.