Troubled National Oil Corporation of Kenya (Nock) recently projected a Sh1.4 billion loss for the year ended June 2020, the firm has been deep in major financial woes with the Kenya Commercial Bank filing to liquidate the state owned firm over debt.
How did it get this far? CORRUPTION! In developing revelations, Nock which is neck deep in debt, allegedly lost more than Sh2.3 billion in a mega scandal involving diversion of fuel products and falsification of credit and delivery notes by officials.
A report by Auditor-General Nancy Gathungu says officials of the agency failed to account for at least 2,280,017 litres of automotive oil (diesel) and 230,458 litres of petroleum motor spirit (super petrol) valued at an aggregate Sh2,270,336,000 based on the pump prices at the time of audit in December 2018.
The report shows that the corporation did not schedule vehicles transporting petroleum products to its customers or undertake daily and monthly stock reconciliation—making it a playground for officials and their cronies to siphon funds easily.
“In addition, instances of malpractices identified in the generation and processing of unauthorized credit notes, illegal diversion of product consignments, dispatches not supported by transporter documentation or not delivered to intended sites,” Ms. Gathungu said in the corporation’s books of accounts for the year to June 2018.
According to documents submitted in Parliament, Nock recorded a 61.3pc decline in fuel sales from 322.8 million litres a year earlier to 124.8 million litres in the year ended June 2020.
In April 2020, KCB commissioned a liquidity and independent business review (IBR) with the aim of auctioning the fuel marketer. KCB is seeking to recover a debt of Sh3.67 billion which had accumulated an interest of Sh147.94 million as of August 31.
Besides KCB, the corporation owes Stanbic Bank Sh1.46 billion, Sh1.29 billion being the principle amount and sh162.1 million in accrued interests as of the end of August this year.
As at the end of August this year, it also owed suppliers Sh628 million. This is attributed to a shortfall in revenue arising from working capital constraints and the Covid-19 pandemic.
Consequently, the shareholder’s equity has significantly reduced from Sh1.62 billion in 2018 to Sh0.28 billion by the end of 2019.
The fate of the firm now lies entirly on the government, as it hopes to get a capital injection that will help it pay banks and suppliers. If the Corporation fails to get a rescue from the government, its assets will be seized and liquidated by lenders to recover the money.
Nock wants the Treasury to urgently provide a Sh5.93 billion bailout to offset the Sh5.3 billion loan and pending bills of Sh628 million owed to small and medium enterprises (SMEs).
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