Report On Consideration Of Sessional Paper No. 2 Of 2025 On Proposed Privatization Of Kenya Pipeline Company (kpc) Limited

REPUBLICOFKENYA

THENATIONALASSEMBLY

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DIRECTORATEOFDEPARTMENTALCOMMITTEES

DEPARTMENTALCOMMITTEEONENERGYANDSELECTCOMMITTEE ONPUBLICDEBTANDPRIVATIZATION

JOINTREPORTONTHECONSIDERATIONOFTHESESSIONALPAPER NO.2OF2025ONPROPOSEDPRIVATIZATIONOFKENYAPIPELINE COMPANY(KPC)LIMITED

CLERK'SCHAMBERS DIRECTORATEOFDEPARTMENTALCOMMITTEES PARLIAMENTBUILDINGS NAIROBI

TABLEOFCONTENTS

| LISTOFABBREVIATIONSANDACRONYMS | LISTOFABBREVIATIONSANDACRONYMS | LISTOFABBREVIATIONSANDACRONYMS | LISTOFABBREVIATIONSANDACRONYMS | |------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------| | PARTI.. 6 | PARTI.. 6 | PARTI.. 6 | PARTI.. 6 | | 1.0 PREFACE 6 | 1.0 PREFACE 6 | 1.0 PREFACE 6 | 1.0 PREFACE 6 | | 1.1 INTRODUCTION 6 | 1.1 INTRODUCTION 6 | 1.1 INTRODUCTION 6 | 1.1 INTRODUCTION 6 | | 1.2 ESTABLISHMENTANDMANDATEOFTHEDEPARTMENTALCOMMITTEEONENERGY 6 | 1.2 ESTABLISHMENTANDMANDATEOFTHEDEPARTMENTALCOMMITTEEONENERGY 6 | 1.2 ESTABLISHMENTANDMANDATEOFTHEDEPARTMENTALCOMMITTEEONENERGY 6 | 1.2 ESTABLISHMENTANDMANDATEOFTHEDEPARTMENTALCOMMITTEEONENERGY 6 | | 1.2.1 CommitteeMembership 7 1.2.2 CommitteeSecretariat 8 | 1.2.1 CommitteeMembership 7 1.2.2 CommitteeSecretariat 8 | 1.2.1 CommitteeMembership 7 1.2.2 CommitteeSecretariat 8 | 1.2.1 CommitteeMembership 7 1.2.2 CommitteeSecretariat 8 | | 1.3 ESTABLISHMENTAND MANDATE OFTHE SELECTCOMMITTEE ON PUBLIC DEBTAND PRIVATIZATION 9 | 1.3 ESTABLISHMENTAND MANDATE OFTHE SELECTCOMMITTEE ON PUBLIC DEBTAND PRIVATIZATION 9 | 1.3 ESTABLISHMENTAND MANDATE OFTHE SELECTCOMMITTEE ON PUBLIC DEBTAND PRIVATIZATION 9 | 1.3 ESTABLISHMENTAND MANDATE OFTHE SELECTCOMMITTEE ON PUBLIC DEBTAND PRIVATIZATION 9 | | 1.3.1 MembershipoftheCommittee 9 1.3.2 CommitteeSecretariat 10 ...11 THESESSIONALPAPERNO.2OF2025ONTHEPROPOSEDPRIVATIZATIONOF | 1.3.1 MembershipoftheCommittee 9 1.3.2 CommitteeSecretariat 10 ...11 THESESSIONALPAPERNO.2OF2025ONTHEPROPOSEDPRIVATIZATIONOF | 1.3.1 MembershipoftheCommittee 9 1.3.2 CommitteeSecretariat 10 ...11 THESESSIONALPAPERNO.2OF2025ONTHEPROPOSEDPRIVATIZATIONOF | 1.3.1 MembershipoftheCommittee 9 1.3.2 CommitteeSecretariat 10 ...11 THESESSIONALPAPERNO.2OF2025ONTHEPROPOSEDPRIVATIZATIONOF | | PART II... 2.0 KENYAPIPELINE(KPC)LIMITEDTHROUGHANINITIALPUBLICOFFER(IPO)ONTHE NAIROBISECURITIESEXCHANGE ...11 | PART II... 2.0 KENYAPIPELINE(KPC)LIMITEDTHROUGHANINITIALPUBLICOFFER(IPO)ONTHE NAIROBISECURITIESEXCHANGE ...11 | PART II... 2.0 KENYAPIPELINE(KPC)LIMITEDTHROUGHANINITIALPUBLICOFFER(IPO)ONTHE NAIROBISECURITIESEXCHANGE ...11 | PART II... 2.0 KENYAPIPELINE(KPC)LIMITEDTHROUGHANINITIALPUBLICOFFER(IPO)ONTHE NAIROBISECURITIESEXCHANGE ...11 | | 2.1 | ANALYSISOFTHESESSIONALPAPER | | 11 | | 2.1.2 | 2.1.1 TheKenyaPipelineCompany(KPC) Limited | Overview | 11 12 | | 2.1.3 | | TheChosenMethodologyforPrivatizingtheKpc | 14 | | | 2.1.4 | RestructuringofKPCUndertheIPO | 14 | | 2.2 | | LEGALBRIEFONTHESESSIONALPAPER | 15 | | | 2.2.1 | Background | 15 | | | 2.2.2 | LegalProvisionsRegulatingtheProcessofPrivatization | 15 | | 2.2.3 PrayertotheNationalAssembly 19 PARTIII.. 20 | 2.2.3 PrayertotheNationalAssembly 19 PARTIII.. 20 | 2.2.3 PrayertotheNationalAssembly 19 PARTIII.. 20 | 2.2.3 PrayertotheNationalAssembly 19 PARTIII.. 20 | | 3.0 3.1 | SUBMISSIONSBYMEMBERSOFTHEPUBLICANDSTAKEHOLDERS | THENATIONALTREASURYANDECONOMICPLANNING | 20 20 | | 3.2 | | MINISTRYOFENERGYANDPETROLEUM | 22 | | 3.3 | | OFFICE OFTHEATTORNEY GENERAL | 24 | | 3.4 | | NAIROBI SECURITIESEXCHANGE | 25 | | 3.5 | 3.6 | THEINSTITUTEOFCERTIFIED INVESTMENTANDFINANCIALANALYSTS(ICIFA) CAPITALMARKETSAUTHORITY | 27 28 | | 3.7 | | INSTITUTEOFECONOMICAFFAIRS(IEA) | 31 | | 3.8 | KENYA PETROLEUM OIL WORKERS UNION (KPOWU) | | | | | PARTIV... | | | | | | | 32 | | | | COMMITTEEOBSERVATIONS ...34 | .34 | | 4.0 5.0 | PARTV.. COMMITTEERECOMMENDATIONS | ...41 | ....41 |

AG

Attorney General

KPC

Kenya Pipeline Company

IPO

Initial PublicOffer

NSE

Nairobi Securities Exchange

EABL

EastAfricaBreweriesLimited

GoK

Government of Kenya

KCB

Kenya Commercial Bank

KenGen

KenyaElectricityGeneratingCompany

KES

Kenya Shillings

ICIFA

InstituteofCertifiedInvestmentandFinancialAnalysts

CMA

Capital MarketsAuthority

PBT

ProfitBeforeTaxation

LPG

LiquefiedPetroleum Gas

MTCC

Morendat Conference Center

FOC

Fiber Optic

MIOG

MorendatInstitute ofGas

ESOP

EmployeeShareOwnershipPlan

IEA

InstituteofEconomicAffairs

KPOWU

KenyaPetroleumOil WorkersUnion

CHAIRPERSON'SFOREWORD

a o sad so o Privatization in accordance with Standing Order No. 202 of the National Assembly on Pipeline (KPC) Limited through an Initial Public Offer (IPO) on the Nairobi Securities Exchange.

The Sessional Paper No. 2 of 2025 on the Proposed Privatization of Kenya Pipeline (KPC) 23 of the Privatization Act, 2005 and subsequently committed to the Departmental Committee on Energy and Select Committee on Public Debt & Privatization for a joint consideration and reporting to the House.Pursuant to the provisions of Article ll8 of the Constitution,the Committees were required to facilitate public participation and make appropriaterecommendationstotheHouseontheSessionalPaper.

The proposed privatization aims to raise funds budgeted for in the 2025/2026 budget required toimplementeconomicandsocialobjectives.Itwill empowerKenyanstoown a stake inone of the country's profitable and strategic enterprises, promote inclusive economic growth and regulatory oversight. The inclusion of an Employee Share Ownership Plan (ESOP) will ensure that staff share in the company'sfuturegrowth.

An advertisement was placed in the dailies on Wednesday, 6th August 2025 pursuant to Article 118(l) (b) of the Constitution of Kenya, 2010, to facilitate public participation on the Sessional Paper.The Joint Committee received and considered memoranda from forty (40) members of the public by Wednesday, 13th August 2025 as per the Matrix attached in Annex 5.

Further,videlettersREF:NA/DDC/ENERGY/2025/056,REF:NA/DDC/ENERGY/2025/057, 2025,theCommitteeinvitedstakeholdersforaretreatatHiltonGardenInnHotel,Machakos County toreceivetheirsubmissions on theSessionalPaper.TheCommittee metthefollowing stakeholders;—

• i.The National Treasury and EconomicPlanning
• i.Ministry of Energy and Petroleum
• iii.PrivatizationCommotion
• iv.Office of the Attorney General
• v.Central BankofKenya
• vi.Nairobi Securities Exchange
• vii.Capital MarketAuthority
• vii.InstituteofCertifiedInvestmentandFinancialAnalysis
• ix.InstituteofEconomicAffairs
• x.Kenya Petroleum Oil Workers Union

The Joint Committee held a total of six (6) sittings, both in-house and stakeholder engagements and recommends that the House approves the Sessional Paper No. 2 of 2025 on the Proposed Privatization of Kenya Pipeline (KPC) Limited through an Initial Public Offer (IPO) on the Nairobi Securities Exchange.

The Committees are grateful to the office of the Speaker and Clerk of the National Assembly for thelogistical and technical support accorded toit in the execution of itsmandate.

Finally, we express our appreciation to Members of the two Committee and the Secretariat for their patience, sacrifice,endurance and commitment to the assignment,which enabled the Committeetocompletethetaskwithinthestipulatedperiod.

It is therefore my pleasant duty and privilege, on behalf of the Joint Committees on Energy and thePublicDebt&Privatization totableitsReportonconsiderationof theSessionalPaper (e o Initial Public Offer (IPO) on the Nairobi Securities Exchange for consideration and adoption bytheHouse.

Hon. David Gikania, C.B.S, M.P. Chairperson, Departmentai Committee on Energy

The.Hon.Abdi Shurie, CBS,M.P. Chairperson,Select Committee on Public Debt &Privatization

I.0PREFACE

1.1 Introduction

1. ThisisthereportoftheJointCommitteesonEnergy andPublicDebt&Privatization on its consideration of theSessional Paper No.2 of 2025onProposedPrivatization of Kenya Pipeline(KPC) Limited through anInitial Public Offer(IPO)onthe Nairobi Securities Exchange pursuant to Section 23 of the Privatization Act, 2005.

1.2 Establishment and Mandateof theDepartmental Committee onEnergy

2. The Departmental Committee on Energy is one of the twenty Departmental Committeesof theNationalAssemblyestablishedunderStandingOrder2l6whose mandatespursuanttotheStandingOrder216(5)areasfollows:

• i. To investigate,inquire into, and report on all matters relating to the mandate,management,activities, administration,operations and estimatesoftheassignedministriesanddepartments;
• i. theeffectivenessoftheimplementation;
• ii. On a quarterly basis, monitor and report on the implementation of the national budget inrespectof itsmandate;
• iv. Tostudyandreviewalllegislationreferredtoit;
• V. To study,assess and analyze the relative success of the ministries and departments asmeasuredbytheresultsobtainedascomparedwiththeirstatedobjectives;
• vi. Toinvestigateandinquireintoall mattersrelatingtotheassignedministriesand departments as they may deem necessary, and as may be referred to them by the House;
• vii. Tovet andreporton all appointmentswhere theConstitution orany lawrequires the National Assembly to approve, except those under Standing Order 204 (Committee on Appointments);
• viii. To examine treaties, agreements and conventions;
• ix. TomakereportsandrecommendationstotheHouseasoftenaspossible, includingrecommendationofproposedlegislation;
• X. To consider reports of Commissions and Independent Offices submitted to the HousepursuanttotheprovisionsofArticle254of theConstitution;and
• xi. ToexamineanyquestionsraisedbyMembersonamatterwithinitsmandate.

3. Inaccordancewith theSecond Schedule of theStanding Orders,the Committee is of energy. 4. In executing its mandate, the Committee oversees the Ministry of Energy and Petroleum.

PARTI

1.2.1CommitteeMembership

5. The Committee was constituted by the House on 27th October, 2022 and comprises of the following Members:

Chairperson

Hon.David Gikaria,CBS, MP Nakuru Town East Constituency UDA Party

Vice-Chairperson

Hon.Lemanken Aramat,MP Narok East Constituency UDA Party

Members

Hon. Charles Gimose, MP Hamisi Constituency ANC Party

Hon. Siyad Amina Udgoon, MP Garissa County Jubilee Party

Hon.Walter Owino,MP Awendo Constituency

Hon.Barongo Nolfason Obadiah.,MP BomachogeBorabuConstituency

ODM Party

ODM Party

Hon.Musili Mawathe,MP Embakasi South Constituency

Hon.GeorgeAladwaOmwera,MP Makadara Constituency

WDM - K Party

ODM Party

Hon.ElishaOdhiambo,MP Gem Constituency

Hon. Cecilia Asinyen Ng'itit, MP Turkana County UDA Party

ODM Party

Hon.Gonzi Rai, MP

Hon.Victor Koech Kipngetich Chepalungu Constituency

Kinango Constituency

ODM Party

CCM Party

Hon. Simon King'ara, MP

Hon. Geoffrey Ekesa Mulanya, MP NambaleConstituency Independent

Ruiru Constituency

UDA Party

Hon.Tom Mboya Odege, MP Nyatike Constituency ODM Party

1.2.2 Committee Secretariat

6. The Committee is facilitated by the following staff:

Mr.FredrickO.Otieno

ClerkAssistantI/HeadofSecretariat

Mr.Salim Athuman

Ms. Brigita Mati

ClerkAssistant III

Legal Counsel I

Mr. Brian Njeru

Mr. Robert Langat

Fiscal Analyst Ill

ResearchOfficerIll

Mr. Ambrose Nguti

Ms. Viola Saiya

MediaRelationsOfficerIl

ResearchOfficerIll

Ms. Viola Saiya

Ms. Lillian Aluga

ResearchOfficerI

PublicCommunications Officer

Mr. Anthony Wamae

Mrs. Rehema Koech

Serjeant-At-Arms

Audio Officer IlI

1.3 Establishmentand Mandate of the SelectCommitteeonPublicDebtand Privatization

7. The powers of each House of Parliament to establish committees and to make Standing Orders for the orderly conduct of its proceedings are provided for under Article 124 of the Constitution of Kenya,2010.To ensure effective oversight on matters concerning public debt,debt guarantees,public-private partnerships,and the privatization of nationalassets,theNational AssemblyStandingOrder207Aestablishes thePublicDebt andPrivatizationCommittee,which istaskedwithspecificmandates such as:

• i. Oversight of public debt and guarantees,pursuant to Article 214 of the Constitution
• ii. Examine matters relating to debt guarantees by the National government;
• ili. Oversight ConsolidatedFundServices excluding audited accounts;
• iv. Examine reports on the status of the economy in respect of the public debt;
• V. Oversight of public-private partnership programs by the national government with respect of the public debt; and
• vi. Oversightprivatizationofnationalassets

8. This Committee is therefore mandated, among other functions, to examine the Consolidated Fund Service Expenditures and propose recommendations to the House for adoption.

I.3.IMembershipoftheCommittee

9. ThePublicDebt andPrivatization Committee ascurrentlyconstituted,comprisesthe following Members of Parliament:-

CHAIRPERSON

Hon. Abdi Shurie, CBS, M.P. Balambala Constituency Jubilee Party

VICE-CHAIRPERSON

Hon.Njoki Irene Mrembo, M.P Bahati Constituency Jubilee Party

Hon. (CPA) Suleka, H. Harun. M.P Nominated MP UDM Party

Hon.Kipkoros Joseph Makilap M.P Baringo North Constituency UDA Party

Hon.OmbokoMilembaM.P Emuhaya Constituency ANC Party

Hon.(Dr.) Irene Kasalu M.P Kitui County Wiper Party

Hon. Kwenya, Thuku Zachary, M.P Kinangop Constituency

Hon. Chege Njuguna M.P Kandara Constituency UDA Party

Jubilee Party

Hon. Muiruri Muthama Stanley, M.P

Hon.Abdi AliAbdi,M.P

Lamu West Constituency

ljara Constituency

Jubilee Party

NAP-K

Hon.Aden Daud,EBS,M.P Wajir East Constituency

Hon. Kirwa Abraham Kipsang, M.P Mosop Constituency

Jubilee Party

UDA Party

Hon.(Dr.) Daniel Manduku,M.P Nyaribari Masaba Constituency ODM Party

Hon.Letipila Dominic Eli, M.P Samburu North Constituency UDA Party

Hon.Barongo Nolfason Obadiah, M.P

Bomachoge Borabu Constituency ODM Party

1.3.2 Committee Secretariat

• 10.The Committee is supported by the following Secretariat:

Mr.LeonardMachira

Principal ClerkAssistant Il & Head of Secretariat

Mr. Chacha Machage

Ms. Julie Mwithiga

SeniorFiscalAnalyst/ ClerkAssistantSeniorFiscalAnalyst

Mr. Job Mugalavai

Ms.Loice Olesia

Fiscal AnalystIl/ Clerk Assistant

Fiscal Analyst II

Ms. Audrey Ogutu

Mr. Timothy Chiko

Legal Counsel Il

Research OfficerIll

Ms. Edith Chepngeno

Ms. Mwanaasha Juma

MediaRelationsOfficerIll

AssistantSerjeant-at-Arms

Mr. George Mbaluka

Mr. Danton Nirvana

OfficeAssistant

Audio Officer Ill

PARTII

2.0THESESSIONALPAPERNO.2OF2025ONTHEPROPOSED PRIVATIZATION OF KENYA PIPELINE (KPC) LIMITED THROUGH AN INITIAL PUBLIC OFFER (IPO) ON THE NAIROBI SECURITIES EXCHANGE

2.IANALYSISOFTHESESSIONALPAPER

2.1.I Overview

• I1. On3IstJuly2025,theCabinetSecretarysubmittedtotheNational AssemblyaSessional Paper proposing the privatization of Kenya Pipeline Company Limited (KPC) through S ) n submissionalignswithSections23and24of thePrivatizationAct,2005,andfollowsthe Privatization Programme approved by the Cabinet in December 2008 and gazetted on I4thAugust2009tosupportresourcemobilization.

12. The Sessional Paper was tabled in the National Assembly on Tuesday, 5th August 2025, andreferredtotheDepartmentalCommitteeonEnergyandtheSelectCommitteeon No.202oftheNationalAssembly.

• 13.An advertisement was published in the daily newspapers on Wednesday, 6th August 2025, inviting Kenyans to submit their responses regarding the Sessional Paper by 5:00 pm on Wednesday, 13th August 2025. The National Assembly invited major stakeholders such as The National Treasury,Privatization Commission,Nairobi Securities Exchange, Capital Markets Authority, Ministry of Energy & Petroleum and its agencies, Attorney General's Office, and civil society representatives to participate. In this regard, the National Assembly conducted public participation on the Sessional Paper, and the related documentation is attached to this report.
• 14.Privatization is the transfer of government ownership in a State-Owned Enterprise (SOE) to private hands, either fully or partially. In tight fiscal conditions, it helps raise o a so sio ao pe as ss p spny anm private sector. Privatization proceeds are a one-time withdrawal of equity,not an ongoingincome.Assuch,anyprivatizationreviewshouldensuretheSOEbecomes more efficient and that the proceeds yield strong returns, support long-term growth, andbenefitfuturegenerations.

15. The National Treasury, which holds 99.9% of KPC shares, has proposed privatizing the company through an Initial Public Offering (IPO) at the NSE. The plan outlined in the Paper would allow the government to retain a stake in KPC while potentially raising approximately Kshs. 100 billion in non-tax revenue for the FY 2025/26 budget. During discussions, the National Treasury stated that no more than 65% of government ownership in the companywouldbeprivatized,resultingin thegovernmentmaintaining 35%control.

• 16.Listing KPC on the NSE through an Initial Public Offer (IPO) and making the offer available tobothlocal and internationalinvestorsis anticipated to enhance market diversification,which is currently dominated by commercial banks and major listed companies such as Safaricom and EABL. As a key player in the energy sector, KPC's

17. The privatization proposal comes at a time when the government is intensifying domesticresourcemobilizationeffortstocontainawideningfiscaldeficitandcurbthe growth of public debt, which stood at over Kshs. 1l.6 trillion as of June 2025. For FY 2025/26, the fiscal deficit is projected at Kshs. 923.15 billion (4.8% of GDP). Financing this gapwill rely heavily on net domesticborrowing of Kshs.635.5 billion (3.3%of GDP) and net external borrowing of Kshs. 287.7 billion (l.5% of GDP). However, limited access to external concessional financing due to stricter global credit conditions and reducedmultilateral lendinghasincreasedrelianceondomesticcapitalmarkets. 18. Thegovernment'srevenue shortfall hasled to increasedefforts todiversifyfunding particularly through asset monetization and privatization, to avoid taxing citizens further Treasury stated thatKshs.Io0 billion from the IPO will help achieve theKshs.I49 billion as proceeds from privatization as contained in the fiscal frameworkfor the FY 2025/26budget,with proceedsdesignated for settling domestic arrears.

2.1.2 The Kenya Pipeline Company (KPC) Limited

a.Infrastructure

19. The Kenya Pipeline Company (KPC) was incorporated in 1973 and began operations in 1978toprovide anefficient,safe,andcost-effectivemeans oftransportingpetroleum products, enhance national energy security, and position Kenya as a regional hub for petroleum distribution. Currently, the KPC is wholly government-owned, with 99.9% of the shares held by the National Treasury and O.1%by the Ministry of Energy and Petroleum. 20. KPC operates 1,342 kilometres of pipeline infrastructure,including the flagship 20-inch Line 5(Mombasa-Nairobi,450km,1,750 m3/hour capacity),western Kenya pipelines, i.e.,Nairobi to Eldoret (Lines 2&4) and Sinedet to Kisumu (Lines 3&6), plus the 4km Shimanzi spur pipeline. The company maintains 1.l28 million cubic meters of storage 3. 2 offshore jetty (4.0-4.5 million liters/hour capacity), and the Lake Victoria marine facility

inKisumu,amongotherfacilities.

21. As of October 2023, the Kenya Pipeline Company (KPC) acquired Kenya Petroleum Refineries Limited (KPRL) through a share transfer, which included additional infrastructure such as pipelines, storage tanks, and truck loading facilities. This acquisition expandedKPC's operational assets and its capacity for fuel transportation andstorage.KPRL's undevelopedland is availableforfuture infrastructure expansion

b.FinancialPerformance

• s o o a s s () o ad m 2019/20 to Kshs. 35.37 billion in FY 2023/24,driven by increased throughput, tariff changes, and infrastructure projects. Despite a dip in 2021/22, operating surplus rose steadily to Kshs Il.80 billion, thanks to cost controls and efficiency gains. Profit before taxalsoincreasedfromKshs6.14billiontoKshs10.01billion.However,netfinance 2023/24.FromFY2020/21toFY2023/24,KPCpaidKshs13.9billion incorporate tax.
• a x u s remained below the pre-COVID-19 high of Kshs. 8.18 billion, reaching Kshs. 6.9 billion in FY 2023/24.The drop to Kshs. I.68 billion in FY 2020/21 was due to reversed tax relief and higher finance costs.Dividend payouts followed a similar trend,with no payment inFY 2021/22. Over theperiod,government dividend income totaledKshs. 23.1 billion, averaging Kshs. 5.8 billion annually, highlighting potential losses if the companywerefullyprivatized.

C.Assets,Liabilities,and Capital Position

24. From FY 2019/20 to FY 2023/24, Kenya Pipeline Company's total assets dropped by 16%,fromKshs143.47billiontoKshs120.72billion,mainly due toa decrease innoncurrent assets like property, plant, and equipment. These fell from Kshs 123.01 billion toKshs I03.37billion,likely reflecting minimal new investments, asset depreciation,or disposals. Current assets also declined in FY 2023/24 after a peak in FY 2022/23, driven by lower short-term deposits and trade receivables. 25. KPC's capital and reserves decreased from Kshs 102.36 billion in FY 2019/20 to Kshs 89.09billioninFY2023/24,reflectingtheeffectsofdividendpayouts,assetrevaluations, Kshs 31.64 billion during the same period. Non-current liabilities fell from Kshs 32.30 billionin2019/20toKshs19.19billion in2023/24,mainly due torepayment of a USD 350 million loan facility for construction of line V from Nairobi to Mombasa. The remaining significant non-current liability is deferred taxation,which stands atKshs19.15billion.Currentliabilitiesvariedbutremainedwithinmanageablelevels, withthehighestpointreachedinFY2022/23.However,thereweremajorconcerns with trade and other payables amounting toKshs 9.88billion,and the current portion of the syndicated loan amounting toKshs2.46billion as of 30th June 2024.

2.1.3TheChosenMethodologyforPrivatizing theKpc

• 26.Section 25 of the Privatization Act 2005 provides for the methods of privatization to include:
• i. Publicoffering of shares;
• ii. Negotiated sales resulting from the exercise of pre-emptive rights;
• iii. Sale of assets, including liquidation; and,
• iv. privatizationproposal.

27. The preferred method for privatizing KPC is an Initial Public Offering (IPO). An IPO refers tothefirstinstanceinwhichacompany'sshares areofferedtothepublicon a stock exchange. The term "public offering" broadly encompasses not only IPOs but also subsequent share sales,such as Follow-on Public Offerings (FPOs)or Secondary Offerings. In this context, the IPO will entail the government divesting a portion of its shares in KPC to the publicvia the Nairobi Securities Exchange (NSE),with regulatory oversight provided by the Capital Markets Authority (CMA).

• 28.The committee alsoconsidered thefollowingprivatization methodologies:
• a)Privatization through Negotiated Salevia Pre-emptive Rightsinvolves selling a technology partnerships, but it may also result in limited transparency, noncompetitiveselection,andthepossibility of stockundervaluation.
• b) Privatization through the sale and liquidation of physical and non-core assets, such as idle land or equipment. Benefits of this methodology included raising quick revenue for the government,reducing maintenance and operations costs; however, this may be inappropriate for strategic SOEs and could disrupt energy security, lead to job losses, undervaluation of assets, and does not support longtermdevelopmentofthesector.

2.1.4Restructuring ofKPC Under the IPO

• 29.According to the Sessional Paper, to successfully undertake an Initial Public Offering (IPO),theKenyaPipeline eCompany(KPC)wouldundergoacomprehensive restructuringprocess,both institutionally and operationally.Thisis essential to meet the regulatory requirements of listing, ensure market confidence, and position the company as an attractive investment to individual and institutional investors.
• 30.Some of thereformscontained in thesessional paperinclude:
• i.AmendmentoftheMemorandumandArticlesofAssociation:Theseare the transferability of shares,include shareholder rights and protections, embed boardgovernanceprovisions in line with the Capital Market Authority's (CMA)

CodeofCorporateGovernanceforissuersofsecurities,andothernecessary changes.

• ii. Aspartofthepublicofferingofsharesprocess,theCompanymayissuenew shares in addition to, or instead of, offering existing government-owned shares. Theissuanceofnewsharesservesseveralpurposes:

2. OIncreasePublicFloat:Enhancesliquidityof the stockpost-listingby creatingasufficientlylargepublicshareholding. 3. EnableBroader Ownership:Allows for public participationwithout immediatelydiluting thegovernment'sexistingstakebelowastrategic threshold.

• iii. To facilitate the issuance of new shares during the IPO, KPC must undertake the followingspecificactions:

5. OBoard and shareholder approvals:The Board of Directors must pass a resolution to increase the authorized share capital;if the current authorized capital is insufficient. 6. Obtain approval from the National Treasury and Cabinet to issue new sharesaspartoftheIPOstructure. 7. Secure shareholder approval (i.e., the government as current sole shareholder)forallotmentofnewshares.

2.2LEGALBRIEFONTHESESSIONALPAPER

2.2.1Background

31. The Sessional Paper proposes the Privatization of the Kenya Pipeline Company Limited throughanInitial PublicOffer(IPO)on theNairobi SecuritiesExchange inlinewith the broader economic reform agenda of the Government to enhance efficiency, competitiveness and financial sustainability in key state-owned enterprises. The Sessional Paper was prepared in accordance with the Privatization Act, 2005 and subsequently approved by Cabinet. The Cabinet Secretary for the National Treasury and Economic Planning now seeks the approval of the Sessional Paper by the National Assembly.

2.2.2 Legal Provisions Regulating the Process of Privatization

• 32.The Privatization Act, CAP 485C was assented on 13th October, 2005 and commenced on Ist January 2008. The long title of the Act provides that it is an Act of Parliament to provide for the privatization of public assets and operations, including state corporations, by requiring the formulation and implementation of a privatization programme by a Privatization Commission to be established by this Act and for related purposes.
• 33.PART Illof the Privatization Act contains provisions thatregulate the privatization programme.

• 34.Section 17 of the Privatization Act provides that there will be a privatization programme thatshallbeformulatedbytheCommission,publishedintheGazetteandapprovedby the Cabinet.

35. Paragraph I.l. on page 2 of the Sessional Paper states that the Company was included in the Privatization Programme approved by the Cabinet in December 2008 and investments, enhancement of transparency and corporate governance, broadening of shareholding in the economy, development of the Capital Markets and raising of resourcestosupporttheGovernmentbudget.

• 36.SectionI7 of thePrivatizationActprovides that the desiredbenefits of a privatization programme are:(l) the improvement of infrastructure and the delivery of public services by the involvement of private capital and expertise; (2) the reduction of the regulation of the economy by reducing conflicts between the public sector's regulatory and commercial functions;(5) theimprovement of the efficiency of theKenyan economy by making it more responsive to market forces; (6) the broadening of the base of capital markets.

37. fullpotential of the companywhile ensuringbroad national benefits,;(2)to enable the Government to raise funds budgeted for in the 2025/2026 budget requiredto stake in one of the country's profitable and strategic enterprises,promote inclusive stockexchange listing andregulatory oversight.The inclusionof an EmployeeShare OwnershipPlan (ESOP) will ensure that staff share in the company's future growth.(4) theparticipationof theprivatesectorwill enhance operational efficiency andinnovation, while the Government retains a strategic role to safeguard national interests and energy reduce reliance on borrowing,and deepencapital markets of Kenya;and(6) the institutionalmodernizationinamanner thatwillbenefitboththepublicandthe economy at large.

• 38.PART IV of the Privatization Act contains provisions that regulate the privatization process.
• 39.Section 23 of thePrivatization Act regulates the privatization proposals by Privatization Commission.The sectionprovides that thePrivatizationCommissionshallmakea

Thereafter, the Cabinet Secretary shall present a report on the privatization proposals for approval by the Cabinet and by the relevant committee of Parliament.

40. included in the Privatization Programme approved by the Cabinet in December 2008 andgazetted on14thAugust 2009.The CabinetSecretaryfor the National Treasury and Economic Planning now seeks the approval of the Sessional Paper by the National Assembly. 2. 41.S Section 24 of the Privatization Act regulates the contents of privatization proposal. The section provides that a privatization proposal shall set out the following matters. 42. Section 24 (a)(i) of the Act states that the privatization proposal should contain a statement providing the purpose of the establishment or existence of the assets or operations being proposed for privatization. Paragraph 3 on Page 4 of the Sessional Paper contains a statement on the purpose for the establishment of Kenya Pipeline Company and states that the main objective of setting up Kenya Pipeline Company was to provide efficient, reliable, safe and cost-effective means of transporting petroleumproductsfromMombasato thehinterland. 4. 43.S containastatementprovidingtheextenttowhichtheassetsoroperations proposed for privatization have met their purpose including any SessionalPaper containastatementon the extenttowhich thepurposeforthe assets or operations proposed for privatization have met their purpose including any inadequacies in meeting that purpose in accordance with section 24(a) (i); 5. containastatementprovidingfortherightsorotherentitlementsandresources thathavebeenprovided tomeetthepurposefor the assetsoroperationsbeing astatementonfinancialresourcesthathavebeenmadeavailabletoKenyaPipeline Company (KPC) and provides that: (l) the Government of Kenya has provided Kenya Pipeline Company with significant financial resources including initial capitalization, sovereign guarantees for external borrowing, direct capital injections, and tax and duty concessions on infrastructure investments since its inception; (2) the government has facilitated stable revenue flows through supportivepolicies and strategicproject cofinancing;and (3) the financial interventionshave enabledKenya Pipeline Company to grow into a critical infrastructure provider in the national and regional energy supply chain.

1998 andSafaricomin2008resulted in increasedoperations andsignificant growth, particularlyforSafaricom in the telecommunications sector.

66. Capital markets provide local and global investorswith options to diversify their assets. investment.Public listings are an important financial reformfor Kenya's capital markets. Africa'stopperformerindollarreturnsin2024. 67. Market capitalization stands atKshs.2.5 trillionwith double-digitgrowth inkey indices for the first half of 2025. This reflects renewed confidence among both domestic and internationalinvestors.Itwas alsosubmittedthathistorical listingssuch as theSafaricom IPOin2008,whichwas oversubscribedby500%demonstratemarket depthand capacity. 68. The proposed privatization of the Kenya Pipeline Company (KPC) is anticipated to provide significant benefits to the petroleum sector, including enhanced capital allocation,acceleratedintegrationofadvancedtechnologies,andincreasedflexibilityin long-term capital and greater risk diversification, which may impact both investment risks and associated premiums.These strategic changes are designed to further the company's mission of ensuring national energy security and stability. 69. Kenya plays a major geopolitical role in East Africa's petroleum sector thanks to its pipeline infrastructure and location. The Kenya Pipeline Company (KPC) transports oil products from the coast to inland and neighbouring countries, including Uganda, and aims to expand into Rwanda and beyond.KPC requires flexibility to raise capital for expanding pipelines, upgrading storage facilities, and developing its refinery to meet the growingregional demand. 70. The contingent liability is that if the transaction is not completed or executed optimally, itmay affect thefinancing of theFY2025/26budget and impactmeasures aimed at economicstability.TheGovernmentistakinganall-Governmentapproachto implementthistransactioninaccordancewithlegalrequirements.

3.2MinistryofEnergyandPetroleum

Hon. James Opiyo Wandayi, EGH, Cabinet Secretary, Ministry of Energy and Petroleum accompanied by Mr. Mohamed Liban, CBS, Principal Secretary State Department for Petroleumandother senior technicalofficers from theMinistry appeared before the Committee on Tuesday, 12th August 2025 and submitted on the Sessional Paper as follows:

71. The Kenya Pipeline Company (KPC) is responsible for transporting and storing petroleum products throughout Kenya and intothe broader East Africanregion.

Established on 6th September I973 under the Companies Act (CAP 486), Laws of Kenya, KPC began commercial operations in 1978. The company is fully owned by the Government of Kenya, with 99.9% of shares held by The National Treasury and less than 0.1%by the Ministry of Energy andPetroleum.

72. The principal activity of KPC is to provide efficient, reliable, safe, and cost-effective means of transporting petroleum products from Mombasa to the hinterland. Extensive feasibilitystudiesundertakenprior tothe establishmentof theCompany,hadrevealed that a pipeline system was the most suitable mode of transporting petroleum products to the hinterland in terms of cost and convenience.KPC commenced commercial operations in September 1978 after construction and commissioning of the pipeline from Mombasa and Nairobi (Line-I). 73. In October 2023, the Kenya Pipeline Company Limited acquired 100% of Kenya Petroleum Refineries Limited (KPRL), which had ceased operations in September 2013. KPC had initially leased the facility as from March 20l7. The acquisition aimed at expanding KPC's business operations by utilizing the idle assets, particularly the storage requires substantive capital injection and cannot be achieved sustainably through public funds. Privatization, therefore, presents an opportunity to unlock value. 74. Kenya Pipeline Company reported revenue growth over the past five years, reaching Kshs. 35.4 billion for FY 2023/24, which represents a 15% increase from the previous year. The company's gross profit was Kshs 20.8 billion, resulting in a gross profit margin of 59%. Earnings Before Interest and Tax (EBlT) stood at Kshs Il.8 billion, marking a 53% rise, while Profit Before Taxation (PBT) reached Kshs 10 billion, up 32% from the prior year. The profit after taxation for the period was Kshs 6.9 billion. 75. The Company's primary source of revenue is transport and storage, which accounts for approximately 95% of total income. Additional revenue streams include Fiber Optic (FOC) services, Liquefied Petroleum Gas (LPG), Morendat Conference Center (MTCC), Morendat Institute Of Gas (MlOG), office rentals, and penalties for overstayed products, among others. 76. As of 30th June 2024, the Company's assets were valued at Kshs. 120.7 billion, reflecting a 5% decline in compound annual growth rate (CAGR) over the past five years due to depreciation and asset disposals. No major capital investments were made during this Commissionwill conductabusinessand assetvaluationunderthePrivatizationAct2005 to determine themarket value for theprivatizationprocess. 6. sas o ad au y so ane pun i y o u s unauditedrevenueforFY2024-2025isKshs.39.8billion,reflecting a12%increasefrom

represents a 65% increase compared tolastyear.

78. Privatizing the Kenya Pipeline Company (KPC) through an IPO will boost regional competitiveness, attract investment, and drive economic growth. It will enable Kenyans to become shareholders, promote inclusivity, enhance transparency and corporate governance, modernize infrastructure for greater efficiency and innovation, and increase 79. The Kenya Pipeline Company (KPC) remains committed to energy security. Petroleum undera three-year tariff model.PrivatizingKPCwill not alter the currentpricing,as compliance, and equitable regional access to KPC's products. 80. The ministry does not anticipate any job losses or disruptions to the current staffing levels, and the organizational structure is not expected to require restructuring. Additionally, the Privatization Commission has put forward an Employee Share Ownership Plan (ESOP) as a measure to address concerns regarding job security. 81. The Kenya Pipeline Company (KPC) has no debt liability guaranteed by the government. To address structural and operational challenges, KPC would need to amend its Memorandum andArticles ofAssociation tofacilitate thefree transferof shares, enhance shareholder rights and protections, and incorporate board governance provisions in accordance with the Capital Markets Authority (CMA) Code of Corporate Governance. These amendments would also support the issuance of securities and implement other relevant changes. 82. As part of the public participation process in developing the Sessional Paper on the Privatization of the Kenya Pipeline Company (KPC), it was reported that the KPC board has already been sensitized, and staff sensitization efforts are currently underway.

3.3OfficeoftheAttorneyGeneral

The Office of the Attorney General submitted the following written submissions on the SessionalPaper:

• 83.The Office of the Solicitor General sent a letter to a joint session of the Departmental Committee on Energy and the Public Debt & Privatization Committee. The letter states regarding the privatization of Kenya Pipeline Company Limited (KPC). The report is to 23 of the Privatization Act, 2005;(2) employee concerns about job security and benefits; and (3) evidence of how the national government has

conducted public participation in developing the sessional paper on KPC's privatization,as required by the Constitution.

84. Regarding adherence to the privatization process in accordance with Section 23ofthePrivatizationAct,2005:

• i)Paragraphs I to 3 of the submission indicate that Kenya Pipeline Corporation, established in 1973 as a state corporation, was mandated to transport and store petroleum products safely and eficiently.Commercial operations commenced in 1978 with objectives including reducing dependence on road and rail transport, lowering fuel costs, and bolstering energy security. Its infrastructure facilitates both domestic and regional petroleum logistics, and it remains wholly owned by the Government of Kenya (99.9% by the National Treasury and 0.1% by the Ministry of Energy and Petroleum).
• ii) Paragraph 5 summarizes the contents of a privatization proposal under Section 24, including: the asset's purpose and performance; recommended impact and benefits; projected advantages from privatization; work plan; necessary legislative amendments; and provisions for citizen participation.
• ii)Paragraph 4 explains that Section 23 of the Act requires the Privatization Commission to prepare detailed proposals for each privatization, which must then be presented by the Minister—after Cabinet approval—to the relevant Parliamentarycommittee.
• iv) Paragraphs 6, 7, and 8 state that the proposal was submitted to the Cabinet forwarded to the National Assembly. Upon receiving Parliamentary approval, the Commission will proceed with implementing the privatization.
• 85.F Regarding how Kenya Pipeline Company has addressed employee concerns about job security and benefits:Paragraphs 6-8 state that (l) no job losses are expected from the IPO as all staff will be retained, (2) any employee matters will follow o oe lm oo as aa () aa shares.

86. Regarding evidence of public participation by the national government in developing the sessional paper on privatization of Kenya Pipeline Company: Paragraphs 12 and 13 note that during the FY 2025/2026 Finance Bill process, the Cabinet Secretary for the National Treasury presented privatization, including KPC, as a funding method and referenced ongoing consultations with the National Assembly as examples of publicparticipation.

3.4NairobiSecuritiesExchange

Mr. Frank Lloyd Mwiti, Chief Executive Officer, Nairobi Securities Exchange appeared before the Committee on Tuesday, 12th August 2025 and submitted on the Sessional Paper No. 2 of 2025 as follows:

• 87.Kenya has the potential to strengthen its capital markets and support development Public Offering (IPO) of KPC on the Nairobi Securities Exchange (NSE) directly aligns with this objective, facilitating the mobilization of resources for the FY 2025/26 budget. Additionally,theIPO is expected to enhance transparency and corporate governance within the company, expand share ownership, and promote overall market development.
• 88.Market conditions indicate that the current macro-fiscal environment is stable,with notable investor interest in energy stocks (KenGen +98.4% YTD; Kenya Power +118.4% YTD). The 2025 market turnover is projected to exceed that of 2024. The IPO aims to raise approximately Kshs. 100 billion in non-debt capital, which may help reduce fiscal strain andcommunicatepolicyreliability toinvestors.

89. Kenya has effectively listed entities like Safaricom, KenGen, KCB, and Kenya Power, promoting innovation,regional growth,job creation,increased taxrevenue,and financial inclusion. Safaricom's listing spurred M-PESA innovation and expansion, while KenGen governance, tax revenue, and investor literacy. A similar approach with the KPC IPO could yield lasting fiscal and economic benefits. 90. The proposed privatization of KPC supports the Bottom-Up Economic Transformation Agenda by democratizing access to wealth. NSE reforms now permit purchase of even a single share, eliminating the previous lo0 share minimum and enabling participation from all income groups. Inclusive measures such as a dedicated retail tranche with guaranteed minimum allocations, robust investor education, and public participation wil ensure fair access and informed decision making. 91. KPC is expected to have access to a range of capital raising options, such as rights issues, infrastructure bonds, commercial paper, and preference shares, without directly involving the exchequer. These mechanisms may also offer features such as lower longterm capital costs, local currency options to mitigate foreign exchange risk, and transparentprice discovery. 92. NSE and market ecosystem are prepared to deliver a successful, oversubscribed IPO and a healthy post-listing market. Preparations include national and diaspora investor education campaigns, readiness audits for brokers and intermediaries, robust cyber and operational risk controls, transparent allocation processes, automated refunds and market stability measures such as volatility auctions and circuit breakers. Additionally, coordination among brokers, banks, registrars, custodians, fund managers and regulators will also be managed. Notably, a fully digital, end-to-end e-IPO process will ensure seamless prefunding,allocation,and refund systems with full audit trails.KPC IPO is an opportunity to raise capital without debt. Given favorable market conditions,

proven precedent, and institutional readiness,the IPO can deliver benefits to the economy and toKenyans.

3.5TheInstitute of Certified Investmentand Financial Analysts(ICiFA)

93. FA. Diana M. Maina, Chief Executive Officer, Institute of Certified Investment and Financial Analyst appeared before the Joint Committee on Tuesday, 12th August 2025. 94. ICIFA supports privatizing Kenya Pipeline Company Limited but notes that the Kshs I00 billion target appears ambitious compared to recent major IPOs, and there is no explanationforhowthisfigurewascalculated. 3. 95.Section 28 of the Privatization Act 2005 requires that privatization be carried out openly and competitively; consequently, transaction advisers must be engaged through transparentandcompetitiveprocurementprocesses. 96. Incorporating specific dates, rather than projected months, into the work plan for the proposed privatization process would enhance the accountability mechanisms associatedwiththeprocess. 97. The rationale for privatization should be articulated more clearly, specifying the anticipated benefits to the company as a distinct justification for the listing. Additionally, remains vague and requires further detail. 6. privatization,additional detail is needed.Prospective shareholders are likelyto require specificrepresentations andwarranties fromcurrent shareholders and shouldalso specifythatalegalopinionwill beincludedintheofferdocument. 7. 99.An Initial Public Listing may take various forms, and different combinations of securities can be issued depending on the specific request for the instrument(s). It is important to assess additional privatization options, considering governance and execution challenges. While an Initial Public Offer (IPO) raises capital, it does not necessarily address governance or execution issues. 8. 100.Regarding therole of theSteeringCommittee,theSessional Paper operationalizes the provisions of Part IV of the Privatization Act 2005.Accordingly,it is necessary to elaborateon thespecificfunctionsof theSteeringCommitteefor eachprivatization transaction,asoutlinedinSections27and30oftheAct.

3.6CapitalMarketsAuthority

FCPA Wyckliffe Shamiah, Chief Executive Officer, Capital Markets Authority appeared before the Joint Committee on Tuesday, 12th August 2025 and submitted as follows:

• 101.On the assessment of micro-fiscal implications of the proposedprivatization including potential short-term and long-term impacts on public finances and capital markets development:

1. The Treasury will raise approximately KES loo billion through the listing, offering which is a significant cash boost to fund public services and infrastructure, and reduce reliance on borrowing. The privatization will therefore alleviate budgetary pressures by approximately Kshs I00 billion

• ii. Privatization throughInitialPublicOffering automatically transitions a company from government-owned to a publicly listed company oversighted by the Capital dividend flows. It is worth noting that all listed companies are expected to adhere to the Corporate Governance Code, which buttresses the importance of listing ofKPC.
• iii. strongerreturns.Safaricom isa case inpoint,wherethe2008 IPOmarked the transformationof thecompanyinto thegiantitisnow.
• iv. IPOproceedsoffer amoreresilient anddiverse revenuebase compared to traditional,oftenvolatilesourcessuch as taxes andborrowing.
• V. An IPO of a high-profile, profitable Company such as Kenya Pipeline has a huge institutional investors (including pension funds and SACCOs),and increase trading volume on the Nairobi Securities Exchange (NSE).
• vi. Awell-structured IPOof theKPCmagnitudewillensure significant local and Kenyans. Hence supporting broad distribution of wealth and bolster public confidence.

102. On the assessment of the readiness and depths of Kenya's capital markets to support a successfulIPOintermsliquidityandmarketstability,theassessmentof thereadiness and depths of the Kenyan capital markets to absorb the proposed listing of the KPC through an IPOat theNSE and articulatelythe effects intermsof market liquidity and marketstabilityfocusesonkeyperformanceindicatorsincludingturnovers,market participation,indices,market concentration as well as macro-economic environment indicators affecting, including the GDP and national savings levels. 103. Kenya's equities market demonstrates sufficient liquidity, depth, and stability to support the successful listing of KPC. Key performance indicators include rising turnover,

participation, and a stable macroeconomic environment. These factors create an enablingplatform for a large,high-profileIPO,withrobust local andforeign demand positioning the market to absorb significant new equity issuance while maintaining overall stability.

104. The listing of Kenya Pipeline Company (KPC) is expected to significantly ease market liquidity stock into the market. The listing of KPC is expected to attract both stable cash flows. Additionally, it is expected to make NSE more attractive to both local andforeigninvestors. 2. 105.On the justification for selecting IPO as the preferred mode of privatization of KPL over the alternative methods such as asset sale, strategic investor participation, or public private partnership, an initial public offering (IPO) is the process by which a private company/government entitybecomespubliclyowned byofferingits shares to thepublic onasecuritiesexchangefor thefirsttime.This allows the companytohaveitsshares tradedonaformalsecuritiesexchange,whileenablingittoraisecapitalbyreducingthe ownership stake of its original shareholders, ultimately benefiting the public as investors. 106. On the measures to uphold market integrity, including safeguards against insider trading, preferential share allocations, and share price market manipulation throughout the IPO Il(l)(c)states that the principal objectives of the Authority as c)the creation, maintenance and regulation,of amarketinwhichsecurities canbe issued andtraded in an orderly,fair and efficientmanner and d) theProtectionofinvestors'interest.Part I1 3 (r) further states that for purposes of carrying out its objectives the Authority may exercise,perform or discharge all or any of the following powers, duties and functions; r) Regulate and oversee the issue and subsequent trading, both in primary and secondary markets,of capital markets instruments. 107. Appointment of a transaction advisor: The transaction advisors are mandated to arerequiredto ensureproperdisclosure ofrelevantinformation and to avoidconflicts of interest. This is stipulated under Regulation 32 (2) A transaction advisor shall take all reasonable and effective measures to prevent or deal with any conflicts of interest that may arise in the discharge of the transaction advisor's duties. 5. 108.Mandatory Disclosures: The Authority requires adequate and honest disclosure of all relevant information pertaining to ensure there is no information asymmetry. This impactonprice.

109. Allocation Criteria: Issuers are required to disclose the allocation criteria for shares in an IPOaspartofitsofferingmemorandum.TheAuthoritypropose to consider full allocation ofretailinvestors or set a quota for retaile.g.l0-30%toencourage small investorstocometomarketgiventhattheycreatemarketactivityduetotheir investors. 2. 110.Identification of insiders: The Authority requires the issuer and transaction advisors todetermine whoareinsidersi.epersons withaccesstorelevant non-public information. Once the insiders are identified they have a policy to deal with actions of insidersprior to the IPO and immediately after issuance. 3. Il1.Blackoutperiods:Individualsdeemedtobeinsidersarenotallowedtotradeatthe IPO without prior approval. The IPO IM could also provide a lockout period for all individuals seen as insiders.Thiswill discriminate themfromparticipating in theIPO and alimitcouldalsobesetforMaximumsharestheycanpurchase. 4. I12. Sensitization and training: There is a need for all players to be aligned and ensure allsystems are connectedwherepossible to avoidmanual intervention asmuch as possible. All agents should be trained on the client handling process, as well as 113. The Capital Markets Regulations require an issuer to establish and disclose in the informationmemorandum afairandequitableallocationpolicyfor the allocationofthe securitiesinapublicoffer.Furtertheissuermusthaveamechanismtosensitisethe general public on the issuance of the shares. 6. 114.To avoid under subscription there could be provision for underwriter.Alternatively, theissuermay allowbiddersfromothercategoriestobidfor theshares.In theevent of an oversubscription, the issuer may opt to have a green shoe option which would be used to benefit from the demand in the security. 7. 115.The issuermust indicateIf there are anysecurities that arereservedfor allocation to any group of targeted investors, this would include offerings to existing shareholders, directors, or employees and past employees of the issuer or its subsidiaries, provided details of these and any other preferential allocation arrangements are disclosed. 8. I16. The Issuer must inform the investing public about the issuance, as well as the allocation the allocation criteria.Theissuer canuseintermediariesasmarketingagents toprovide a wider reach, as well as through other public or social media channels.

proven precedent, and institutional readiness,the IPO can deliver benefits to the economy and toKenyans.

3.5TheInstituteofCertified InvestmentandFinancial Analysts(ICiFA)

93. FA. Diana M. Maina, Chief Executive Officer, Institute of Certified Investment and Financial Analyst appeared before the Joint Committee on Tuesday, 12th August 2025. She submitted the following comments and proposals on the Sessional Paper: 94. ICIFA supports privatizing Kenya Pipeline Company Limited but notes that the Kshs 100 billion target appears ambitious compared to recent major IPOs, and there is no explanation for how this figure was calculated. 3. 95.S Section 28 of the Privatization Act 2005 requires that privatization be carried out openly transparent andcompetitiveprocurementprocesses. 96. Incorporating specific dates,rather than projected months,into the work plan for the proposed privatization process would enhance the accountability mechanisms associatedwiththeprocess. 97. The rationale for privatization should be articulated more clearly, specifying the anticipatedbenefitstothecompanyas adistinctjustificationfor thelisting.Additionally, the description of the use of proceeds, as currently outlined in the sessional paper remains vague and requires further detail. 98. privatization, additional detail is needed. Prospective shareholders are likely to require specific representations and warranties from current shareholders and should also specify that a legal opinion will be included in the offer document. 99. An Initial Public Listing may take various forms, and different combinations of securities can be issued depending on the specific request for the instrument(s). It is important to assess additional privatization options, considering governance and execution challenges. While an Initial Public Offer (IPO) raises capital,it does not necessarily addressgovernanceorexecutionissues. 8. I00. Regarding the role of the Steering Committee, the Sessional Paper operationalizes the provisions of Part IV of the Privatization Act 2005. Accordingly, it is necessary to elaborate on the specific functions of the Steering Committee for each privatization transaction,asoutlinedinSections27and30of theAct.

3.6CapitalMarketsAuthority

FCPA Wyckliffe Shamiah, Chief Executive Officer, Capital Markets Authority appeared before the Joint Committee on Tuesday, 12th August 2025 and submitted as follows:

101. On the assessment of micro-fiscal implications of the proposed privatization including potential short-term and long-term impacts on public finances and capital markets development:

• i. The Treasurywillraise approximatelyKESloobillion throughthelisting, offering whichis a significantcashboost to fundpublic services and infrastructure, and reduce reliance on borrowing. The privatization will therefore alleviate budgetary pressures by approximately Kshs lo0 billion
• ii. Privatization through Initial Public Offering automatically transitions a company from government-owned to a publicly listed company oversighted by the Capital Markets Authority (CMA). This new dimension supports improved governance and more transparentfinancial management,potentially increasing consistent dividend flows. It is worth noting that all listed companies are expected to adhere to the Corporate Governance Code, which buttresses the importance of listing ofKPC.
• iii. stronger returns.Safaricom is a case in point,where the 2008 IPO marked the transformationofthecompanyintothegiantitisnow.
• iv. IPOproceeds offer a moreresilient anddiverse revenuebase compared to traditional, often volatile sources such as taxes and borrowing.
• V. An IPO of a high-profile,profitable Company such as Kenya Pipeline has a huge potential of reigniting investor interest, broaden participation from retail and institutional investors (including pension funds and SACCOs),and increase tradingvolumeon theNairobiSecuritiesExchange(NSE).
• vi. A well-structured IPO of the KPC magnitude will ensure significant local and Kenyans. Hence supporting broad distribution of wealth and bolster public confidence.

8. 102.On the assessment of the readiness and depths of Kenya's capital markets to support a successful IpO in terms liquidity and market stability, the assessment of the readiness and depths of the Kenyan capital markets to absorb the proposed listing of the KPC through an IPO at the NSE and articulately the effects in terms of market liquidity and market stability focuses on key performance indicators including turnovers,market capitalization, Assets under management (AUM), Trading Volumes, local and foreign participation,indices,market concentrationaswell as macro-economic environment indicators affecting,including the GDP and national savings levels. 9. 103.Kenya's equitiesmarketdemonstrates sufficient liquidity,depth,and stability to support the successful listing of KPC. Key performance indicators include rising turnover,

improved liquidity ratios,growth in assets under management, strong foreign investor participation, and a stable macroeconomic environment. These factors create an positioning the market to absorb significant new equity issuance while maintaining overall stability.

104. The listing of Kenya Pipeline Company (KPC) is expected to significantly ease market liquidity stock into the market. The listing of KPC is expected to attract both stable cash flows. Additionally, it is expected to make NSE more attractive to both locall andforeigninvestors. 105. On the justification for selecting IPO as the preferred mode of privatization of KPL over the alternative methods such as asset sale, strategic investor participation, or public company/government entity becomes publicly owned by offering its shares to the public on a securities exchange for thefirst time.This allows the company to have its shares traded on a formal securities exchange,while enablingit toraise capital by reducing the ownership stake of its original shareholders, ultimately benefiting the public as investors. 106. On the measures to uphold market integrity, including safeguards against insider trading, preferential share allocations, and share price market manipulation throughout the IPO process,theAuthority'shas adual mandate,todeveloptheCapital Markets inKenya Il(l) (c) states that the principal objectives of the Authority as c) the creation, maintenance andregulation,ofamarketinwhichsecuritiescanbeissued andtraded in an orderly,fairandefficient manner and d)theProtectionofinvestors'interest.Part I1 exercise, perform or discharge all or any of the following powers, duties and functions; r) Regulate and oversee the issue and subsequent trading,both in primary and secondary markets,ofcapitalmarketsinstruments. 4. 107.Appointment of a transaction advisor:The transaction advisors are mandated to ensurecompliancewithcapitalmarketsActandRegulationsthereto.Additionally,they are required to ensure proper disclosure of relevant information and to avoid conflicts of interest. This is stipulated under Regulation 32 (2) A transaction advisor shall take all reasonable and effective measures to prevent or deal with any conflicts of interest that may arise in the discharge of the transaction advisor's duties. 108. Mandatory Disclosures: The Authority requires adequate and honest disclosure of all relevant information pertaining to ensure there is no information asymmetry. This includes details of any existing arrangements e.g. debt structuring that may have an impact onprice.

• 109.Allocation Criteria: lssuers are required to disclose the allocation criteria for shares in an IPO as part of its offering memorandum. The Authority propose to consider full investorstocometomarketgiventhattheycreatemarketactivityduetotheir investors.
• I10. Identification of insiders: The Authority requires the issuer and transaction advisors todetermine who are insiders i.e persons with access to relevant non-public information. Once the insiders are identified they have a policy to deal with actions of insiderspriorto the IPO and immediately after issuance.
• Ill.Black outperiods:Individuals deemed to be insiders are not allowed totrade at the IPOwithoutpriorapproval.TheIPOIMcouldalsoprovidealockoutperiodfor all individualsseen asinsiders.Thiswill discriminate themfromparticipatinginthe IPOand a limitcould alsobesetforMaximum sharestheycanpurchase.

112. Sensitization and training: There is a need for all players to be aligned and ensure all systems are connected where possible to avoid manual intervention as much as possible.All agents should be trained on the client handling process,as well as application andregistrationrequirements/process. 113. The Capital Markets Regulations require an issuer to establish and disclose in the information memorandum a fair and equitable allocation policy for the allocation of the securitiesinapublicoffer.Furtertheissuermusthaveamechanismtosensitise the generalpublicon theissuanceof theshares.

• 114.To avoid under subscription there could be provision for underwriter.Alternatively, theissuermay allowbiddersfromothercategoriestobidfor theshares.In theevent of an oversubscription, the issuer may opt to have a green shoe option which would be usedtobenefitfromthedemandinthesecurity.
• I15.The issuer must indicate If there are any securities that arereserved for allocation to any group of targeted investors, this would include offerings to existing shareholders, directors, or employees and past employees of the issuer or its subsidiaries, provided details of these and any other preferential allocation arrangements are disclosed.
• Il16. The Issuer must inform the investing public about the issuance, as well as the allocation criteria. This will ensure that there are no complaints arising from misunderstandings of the allocation criteria. The issuer can use intermediaries as marketing agents to provide a widerreach,aswell asthroughotherpublicorsocial mediachannels.

• 117.On the evaluation of the likely effects of the transaction on thefinancial sector,including thebanking sector'sexposure toSOEs andpotential crowding-in or crowding-out effects ontheprivatesectorcredit,theKPCInitial PublicOffering(IPO)is expected to have several direct and indirectimpacts on the financial sector.These effects could span across financialmarkets,institutions and investorbehaviour.Thefinancialsectorin Kenya is primarily divided into five large sectors: Capital Markets, Pensions, Insurance, SACCOs,and the Banking sector.
• I18. The Kenya Pipeline Company (KPC) IPO is expected to introduce new securities to the market,offering investors a fresh and attractiveinvestment opportunity.This is expected to lead to a surge in trading activity, with a significant increase in both trading volumes and overall market liquidity. Currently, the Nairobi Securities Exchange (NSE) has a market capitalization of approximately Kshs. 2,505.07 billion. With the listing of KPC, this figure is projected to rise by at least Kshs. l00 billion, bringing it to around Kshs. 2,605.07 billion, even before accounting for the broader market reaction to such a positive development. If the IPO is successful and investor sentiment remains strong, market capitalization could exceed Kshs.3 trillion by the close of the financial year.
• I19.OnthePolicyrecommendationsonhowtostructureandtime thetransactionto minimize market disruptions, ensure transparency, and align with the broader fiscal and monetary policy objectives, Proper IPO structuring and timing are very critical in fiscal and monetary policy objectives.

3.7 Institute of Economic Affairs (IEA)

Mr. Kwame Owino,Chief Executive Officer,Institute of Economic Affairs appeared before the Joint Committee on Tuesday, 12th August 2025 and submitted as follows:

120. The proposal for privatization of the Kenya Pipeline is bound to have substantial benefits for the broad economy, the expected private owners of the facility, and the public sector.ThedivestitureofKPCalignswithKenya'sVision2030andenergypolicyby keeping infrastructure and operations primarily in private hands while the government retains regulatory control over pricing 121. Listing shares on the NSE will significantly boost market activity, representing one of the largest infusions in over a decade. The residual ownership of the asset by the GoK willprovidearevenuestreamfromprofits,whichcouldbededicatedtowardspriority publicinvestments. 3. 122.Post-privatization,KPCwill still beregulated byEPRA,with thegovernmentbenefiting from taxes, and future licensing rights. Parliament should ensure that EPRA and the Competition Authority monitor tariffs to prevent the abuse of market power,with provisionsinplacefor issuing competing licensesif necessary.

• 123.Althoughitiscommendable thattheNational Treasuryhasseta capofKshslo0million onall fees,Parliamentshould ensurethatcompetitiveprinciples areupheld throughout thesaleprocess and thatallexpenditure on transactioncosts demonstrablydelivers value for money. Streamlining the number and scope of transaction advisers could

124. Parliament should ensure a competitive sale process, limit the roles of advisers, and use theNational Treasurymustretain therighttorejectbidsbelowasetreserveprice and ensurethatnosaleproceedsaremadeatadiscounttotheactualvalue.

• transparency in the valuation process, it is proposed that Parliament establish mechanisms for the Auditor-General toindependentlyverifyvaluations before any transactionisfinalized.Thisreviewwouldinclude anassessmentof themethodology used,anexaminationof key assumptions(particularlythoserelatedtomonopoly earnings potential), and a comparison with independent expert valuations. Without such verification,ParliamentcannotconfirmthattheKshloobillionfigurereflectsfairmarket value.

126. KPC owns valuable land beyond its pipeline operations, but limited disclosures risk the Mombasa Kipevu Oil StorageFacility and Nairobi Terminal,bothwith significant real estate potential.Clearer disclosures would help investors accurately value KPC's real estateholdings.

• 127.Thegovernmentfacesminimal risk toitsinvestment or serviceprovisionfroma maintainingsubstantialinfluenceincorporatedecisions toprotectshareholderrights. Gradual, full privatisation is preferred, with the government shifting to a regulatory role freefromconflictsofinterest.
• Paper, is found to be compliant with the relevant legal frameworks. The proposal aligns with the Privatisation Act, 2005, by clearly outlining KPC's establishment objectives,

3.8KenyaPetroleumOilWorkersUnion(KPOWU)

Mr. George Okoth, General Secretary, Kenya Petroleum Oil Workers Union (KPOWU) appearedbeforetheJointCommitteeonWednesday,13thAugust2025andsubmitted as follows:

129. The Kenya Petroleum Oil Workers Union (KPOWvU) opposes plans to privatize or sell the Kenya Pipeline Company Limited (KPC), a vital state-owned asset responsible for fuel transport and storage across Kenya and East Africa. KPC's pipeline network ensures a steady fuel supply, economic stability, and public revenue, while also supporting Kenya's regional influence. 130. The workers' union submitted that privatizing KPC risks undermining Kenya's energy sovereignty by ceding control of this vital infrastructure to profit-driven or potentially foreign interests. 3. may increase significantly. Such changes could lead to higher fuel costs, which would impact production expenses and the overall cost of living. 132. Privatization often results in job cuts, outsourcing, and reduced benefits. KPOWVU demands: (i) an immediate halt to KPC privatization or share sales; (i) transparent disclosure of motives, beneficiaries, and impacts; (ii) thorough public participation and independent review by Parliament and oversight bodies; (iv) legal protection for jobs, benefits, and union status if changes occur; and (v) alternative reforms that maintain publicownership. 133. KPC is a parastatal in Kenya that has historically generated steady revenues for the Exchequer.Selling itwould replaceongoingincomewith a singlefinancial receipt. 134. The privatization process began without meaningful public input, stakeholder approach conflicts with constitutional principles of transparency (Article Io) and informed consent (Article 201). 135. SKPOWU was prepared to mobilize its members nationwide, undertake industrial action as permitted under the Labour Relations Act, and pursue legal remedies to protect bothworkers'rights and national interests incase the Union's demands were notmet.StrategicassetslikeKPCmustremainunderdemocraticcontrol tosafeguard Kenya's long-term development. While remaining open to constructive dialogue, KPOwWU is resolute in its commitment to safeguard the integrity of the country's critical energy infrastructure.

PARTIV

4.0 COMMITTEEOBSERVATIONS

• 136.Arisingfrom deliberations with stakeholders and onsubmissions,theJoint Committee made the following pertinent observations:

1.Suitability for privatization of Kenya Pipeline Company Limited:

• THAT, Kenya Pipeline Company (KPC) is a strategic state corporation of critical national and regional significance,serving as the backbone for petroleum transportation and storage in Kenya and neighboring countries. Further,KPC's stable operational performance, strong financial standing, and solid market position present an opportunitytounlocknetpositivewealthtransfer to thepeople ofKenyawhile attracting substantial investor interest.Inview of these attributes,the Committee considersKPCwell-positioned and suitable for privatization through an approachthat maximizespublicvalueandsafeguardsnationalstrategicinterests.

2. Government shareholding pre- and post-IPO:

• THAT, the Government of Kenya owns l0O percent of the Kenya Pipeline Company of government ownership in the Company, thus leaving 35 percent under the control of the Government. Through this, the government seeks to derive Kshs.Io0 billion fromtheprivatizationtransaction.

3.Reasonsfor privatizing the KPC:

• enhance corporate governance, and the Company's ability to meet rising domestic and regionalenergyneedswhilebroadeningthegovernmentrevenuebasewithout diminishingprivatesectorwealth.

4.Market conditions of privatization:

• -THAT,the Currentconditionspresent amorefavorable environmentforprivatization compared to 2009. The market climate is favorable, characterized by a strong performanceoftheNairobiSecuritiesExchange,substantial capital depthinthe Kenyan market, stable macroeconomic indicators including interest rates, inflation, and andefficiencyof anIPOtransaction.Thegrowingenergydemand alsonecessitates increased investment and accessto capital markets tomeetfuture needs.

5.Overall impact on revenue generation capacity:

• THAT, increased capital access, improved financial performance, and operational efficiency following the privatization of KPC are expected to enhance profitability, related economic spillovers, which will strengthen the government's overall revenue capacity and collection.

6.Strong Regulatory Environment:

• -THAT, Kenya has a robust and transparent regulatory framework, particularly in the capitalmarkets andenergysector,whichisessentialforbuildinginvestorconfidence and ensuring the integrity of the IPO process. Effective oversight by institutions such as the Capital Markets Authority, Central Bank of Kenya, Nairobi Securities Exchange, risks, enhance the attractiveness of the privatization process, and contribute to the successandsustainabilityoftheIPO.

7.Benefits of an Initial Public Offer (iPO):

• THAT, listingKPC through an IPOwould have thefollowing impact:
• a.Enhance the Company's access to capital via the securities exchange, strengthen corporate governance, and diversify investment opportunities;
• b. Positively influence Kenya's capital markets by deepening market activity, broadening sector representation beyond telecommunications and banking, and improving transparency through public reporting requirements; and
• c.Expand citizen ownership of a strategic national asset, provide a transparent and equitable ownership transfer process,create additional savings avenues for Kenyans, democratize ownership of a profitable state-owned enterprise, and delivernetincometoshareholders.

8.Previousprivatizationsuccessesandfailures:

• THAT, Kenya's privatization history presents both significant successes and notable shortcomings, many of which became evident only after the completion of transactions and should therefore be assessed on a case-by-case basis.Successful examples such as Safaricom, KenGen, and KCB demonstrate how privatization can expand domestic savings, improve investor literacy, generate direct and indirect employment, and stimulate entrepreneurship and the growth of new industries nationwide.However,pastchallenges highlight the need for the government to This includes ensuring that public interests remain aligned with market dynamics,

improved governance, and broader industrial growth objectives well beyond the privatization transactionstage.

9.Availability of valuation and transparency:

• THAT, there is limited information and transparency in the pre-approval stage of the privatization process due to current weaknesses and lack of specification of the privatization law.To this end, and despitethelack of aregulatoryframework;
• a.Transparency is a constitutional requirement that should be adhered to at all times.As such,thevaluationofthecompanyshouldbecontained inthe produced andpublicizedfor thegeneralpublic.
• b.SubjecttoSection31ofthePrivatizationAct,2005,thePrivatizationCommission shall undertake a valuation of the actual financial and assetposition of theKPC and submit a reportto the National Assembly.This should also take future business potentialofthebusiness.

10. Post audit process:

• THAT,subjecttoArticle229oftheConstitution,theOfficeoftheAuditorGeneral post-transactionauditprocess shouldbeundertakenbythe Officeof theAuditorGeneral,andanauditreportshouldbesubmittedtotheNational Assemblywithin sixmonthsoftheendofthetransactionprocess.

11.Safeguardsfor national and energy security:

• THAT, given the strategic importance of the Kenya Pipeline Company (KPC) to the process must be designed to preserve the State's ability to safeguard critical Baqa anbau se ins ng ndnan nsua pe anse provisions in the transaction structure or relevant legislation to protect national security and interests, maintaining State oversight over strategic assets, and ensuring compliance with national energy policy objectives.

12. Safeguarding affected parties and key stakeholders:

• THAT, there are key affected parties, such as KPC employees, who should be affectedpartiesshouldbeincludedintheownershipstructuretoensuretheir perspectives are represented at the board level, with the national government leveraging its majority stake to safeguard their interests. However, care should be

taken not to constrain the company's ability to independently develop strategies, innovate,orreinventitselfforgreater efficiency and allowthenewmanagement to focus on maximizing shareholder returns, compliance with domestic and international lawsandstandards,andenhancingcompetitiveness.

13.Ownershiplimitsfor stakeholders:

• THAT, while the proposed privatization of 65 percent of the Government's stake in the Kenya Pipeline Company (KPC) will broaden ownership and attract diverse investors, it is important to safeguard against excessive concentration of shares in the hands of a single entity or related parties. Setting a maximum ownership limit for any one shareholder will helppreservebroad-based ownership,promote market competitiveness, and protect national and energy security interests. Such a cap will alsomitigatetherisksofunduecontrol,potentialmarketmanipulation,orstrategic decisionsthatmayconflictwiththecountry'slong-term economic andsecurity objectives.

14.Resource mobilization risk:

• THAT, the National Treasury intends to raise Kshs.Io0 billion from the IPO to finance the FY 2025/26 budget, representing short-term resource mobilization. While technically feasible within 12 months, experience indicates that IPOs of this magnitude can take up to threeyears to conclude.Failure to factor in timing risks mitigation strategy to address potential delays and to make provisions for any shortfallintheprojectedrevenues.

15. Valuation costs and risks:

• THAT,there is a needfor all liabilities(debt andcredit)andrisks affectingthe valuation of KPC to be comprehensively assessed, transparently disclosed, and factoredinto thetransactionvaluationbeforeproceedingwiththeIPO.Therisks identifiedinclude:
• a.Pending lawsuits amounting toKshs.5.75billion and unresolved compensation claims worth Kshs. 3.8 billion by residents of Makueni County due to historical grievanceslinkedtopipelineoperations.
• b.Loss of approximately Kshs. 400 million in the Mzima pipeline project due to stalled execution and procurement lapses, a garnishee order of Kshs. 485 million in favour of Zakhem International following contractual disputes over the Line V project.

• C.The potential loss of public funds amounting to Kshs. I92.6 million after Asharami Synergy took over the LPG facility despite prior investment by KPC.

16.Treatmentofsubsidiaries:

• THAT, in 2023, KPC acquired Kenya Petroleum Refineries Limited (KPRL) as a subsidiary. In the engagement with the National Treasury and the Ministry of Energy andPetroleum,itwasindicatedthattheKPRLwillbeincludedintheKPC privatization package,and as such, two government entities will be privatized at the sametime.Assuch,thisconsiderationshould influencethevaluationofthe transaction and thepercentageofequitytobeoffered.Aclearstatementshouldbe includedintheprospectusonhowthissubsidiaryarrangementhasbeenfinancially evaluatedandfactored.

17.Procurementoftransactionadvisors:

• competitively,and the cost of the transaction, set at Kshs.lo0 million, should not deviatefromreasonable market rates.Previous privatization indicated that the cost could increase substantially if not capped. This should therefore be closely controlled approvalfromtheNationalTreasuryshouldbesoughtbeforeanyincreasein expenses.

18. Use of proceeds:

• THAT, while the Sessional Paper indicates that the proceeds, Kshs.I00 billion will be utilized in either development expenditure, pending bills, or liability management. TheCommitteeobservedthatduetoinadequaciesofthe2005law,thereisnoclear mechanism that outlines how the proceeds from privatization transactions will be utilizedorsafeguardedforfiscalsustainabilityandfuturegenerations.

19. Lack of Policy Synchronization:

• THAT, there is a need to increase the synchronization of non-tax and non-debt financing options, such as Privatization and Public-Private Partnerships (PPPs), to ensure coherent policy implementation, optimize resource mobilization, and maximizetheeconomicand long-termfiscal benefitsofalternativefinancing mechanisms.

20.IncreasedPublicDisclosureand MarketingoftheIPO:

• THAT,while some publicdisclosure effortshad been undertaken to support the need to strengthen marketing and communication strategies for the IPO, which should aim to increase public understanding of the costs, risks, and benefits of the IPO,andhowtoparticipate intheIPO.Itshould leverage allavailable communication channels,includingpublicroadshows and diverse media platforms. whileensuringafairbalancebetweenlarge,small,anddiasporainvestors.

21. Leveraging credit and savings platforms to facilitate participation:

• THAT, purchasing shares will require financial outlays by individuals, and therefore, access to financing will be essential to encourage widespread participation. As such, proactive engagement with banks, savings and credit platforms, including SACCOs, commercial banks,and theHustlerFund,willbenecessarytoprovide financing options that enable Kenyans from all walks of life to invest in the IPO, thereby promoting inclusive ownership and enhancing the utilization of these financial facilities.

22.Periodic reporting on privatization transactions:

• THAT, existing laws provide that theimplementation of the listingprocess requirements shall commence upon approval by the National Assembly, and the Committee observed that thereis a need for the submission of periodicprogress reports to the National Assembly on each stage of the implementation of the privatization process for continuous oversight and accountability.

23.Eligibility ofInvestors:

• THAT, Section 29 of the Privatization Act, 2005 provides that both Kenyan and nonKenyan investors are eligible to participate in privatization. The Committee noted thenecessityfortheNational Treasury,inlinewithsection29(2)oftheAct,to enforce a minimum level of participation for Kenyan citizens in such transactions, ensuring broader local ownership and from all walks of life including the youth, women, persons with disabilities and that the process is aligned with national economicempowermentobjectives.

24.Reforms in the privatization legislative framework:

• THAT, while the current sessional paper has been submitted pursuant to the Privatization Act, 2005, the Joint Committee is cognizant of the ongoing legislative reforms,includingtheconsiderationof theprivatizationbill2025.As such,even uponapproval,theprivatizationoftheKPCshouldbeundertakeninadherenceto the prevailing law, incorporating any consequent statutory amendments or regulatory directives and guidelines.

25.SafeguardingCompetition in thePetroleumSector:

• To prevent the emergence of a monopoly, the privatization of KPC should be petroleum products and does not venture into the importation or sale of petroleum and Petroleum Regulatory Authority, and the National Assembly.

PARTV

5.0COMMITTEERECOMMENDATIONS

137. In view of the observations arising from the consideration of the Sessional Paper No. 2 of 2025 on the privatization of the Kenya Pipeline Company Limited, the Joint Committeefindsthecompanyis suitableforprivatization andrecommendsthat:

• i. The National Assembly approves the Sessional Paper No. 2 of 2025 on the privatization of the Kenya Pipeline Company (KPC) Limited;
• ii. The privatization of the Kenya Pipeline Company Limited be undertaken inline with the observations contained inthis report; and,
• ili. The proposals identified to resolve observations contained in this report should be incorporated intolegislation regulating privatization in Kenya.

SIGNED..

DATE

HON. DAVID GIKARIA, C.B.S, M.P. CHAIRPERSON,DEPARTMENTALCOMMITTEEONENERGY

SIGNED..

DATE..

THE.HON.ABDISHURIE,CBS,M.P. CHAIRPERSON,SELECTCOMMITTEEONPUBLICDEBT& PRIVATIZATION

ANNEXURES

AnnexI:AdoptionList

Annex2:Minutes

Annex3:BriefsbyPBOandLegalServices

Annex4:SubmissionsbyInvitedStakeholders

Annex5:Submissionsby the Membersof thePublic