AfrOil: NOCK under fire from government auditors

The National Oil Corporation of Kenya (NOCK) is under fire from the government for its shaky finances, with the Office of the Auditor-General (OAG) expressing particular concern about the company’s failure to pay loans from KCB Bank Kenya.

The OAG noted in a report on NOCK’s performance in Fiscal Year 2019/2020 that the state-owned firm had been borrowing far more money than it was capable of repaying. NOCK’s total debt load now tops KSH5bn, with debts to KCB Bank Kenya accounting for more than KSH3.6bn of the total, it said.

“As a result of the default, one of the lenders, KCB, consolidated its outstanding loans and interests into one term loan of KSH3.664.121bn reported as current borrowings,” the OAG document stated. “The implication of the lender’s action to charge interest on the capitalised interest thus [increases] the corporation’s liabilities.”

The report further noted that KCB Bank Kenya had offered to restructure the debt in July 2020 and criticised NOCK’s management for declining this proposal and not seeking another solution. “The impasse may lead to the corporation losing strategic assets [that] were used as collateral to secure the loans to the financiers through repossession,” it commented.