- It has been operating at the mercy of bank overdrafts and loans from KCB and Stanbic Bank, which are now threatening to pull the rug from under its feet, having ran out of patience.
- National Oil uses KCB and Stanbic Bank to fund its petrol and diesel purchases.
A default means it will soon run out of stocks and its petrol stations will be empty if the banks do not loosen their purses.
State-owned National Oil Corporation of Kenya (Nock) is the latest parastatal that is teetering on the edge of bankruptcy after it defaulted on five bank loans and breached several lending conditions for others.
The Nation has learnt that the State corporation, which dropped its Chief Executive Officer (CEO) MaryJane Mwangi on Wednesday, has been operating at the mercy of bank overdrafts and loans from KCB and Stanbic Bank, which are now threatening to pull the rug from under its feet, having ran out of patience.
On Wednesday, after a charged board meeting, the oil marketer said its CEO had opted not to renew her contract, a polite language used by companies to communicate sacking decisions. The board replaced her immediately, pointing to a fallout.
“During a board meeting held on October 9, 2019, the CEO of National Oil Corporation of Kenya, Ms MaryJane Mwangi, communicated her decision not to renew her contract. In this regard, the board has accepted her decision and has with immediate effect appointed Mr James Nyamongo to serve as CEO in an acting capacity pending recruitment of a substantive CEO,” Nock said in a statement.
The practice is, when a CEO opts not to apply for a second term, she remains in office for the remainder of her term or until a replacement is found.
In the past, the National Oil board has been accused of being hostile to its CEOs if they do not ‘play ball’. Big tenders at the agency that have caused friction include the oil jetty and the mwananchi gas project, which has since hit a dead end, and a fuel supply quota to government entities.
Documents seen by Nation paint a picture of a firm that is in financial stress and its lenders are preparing to draw blood. National Oil uses KCB and Stanbic Bank to fund its petrol and diesel purchases. A default means it will soon run out of stocks and its petrol stations will be empty if the banks do not loosen their purses.
“Further to our various correspondences and discussions with regard to your facilities with us, and the various meetings held with you and the finance manager, Mr Alex Magu, we wish to inform you that your accounts continue to be irregular,” KCB says in a letter addressed to National Oil.
According to the letter, the bank and Nock already had two meetings mid-September that did not bear fruit. KCB went ahead and gave the firm 14 days to regularise its debt or face sanctions. The deadline elapsed.
By September 13, the overdraft account had Sh814.7 million in arrears and had been in arrears for 97 days, which has now crossed 110 days.
The other term loans the bank wants to recover include Sh9.5 million that was 13 days in arrears and Sh23.3 million that was 35 days in arrears. The other two term loans that were in arrears are Sh6 million and Sh11.3 million. In total, the bank is demanding Sh865 million.
KCB also said it was in the process of reporting Nock to credit reference bureaus in compliance with the requirements of the Central Bank of Kenya.