Page 17 - DMEA Week 42

DMEA POLICY DMEA

NOCK facing major financial woes

KENYA THE National Oil Corporation of Kenya Morintat reminded legislators that NOCK
(NOCK) is struggling to remain afloat amidst had succeeded in striking a deal with KCB
The national oil serious financial troubles, according to local on repayment of the two credits in April.
company sustained press reports. Under that agreement, he said, the firm was
$12mn in losses in the Company officials told members of Kenya’s supposed to be able to consolidate the debts
first half. Parliament during a hearing earlier this month and suspend payments until February 2021,
that state-owned NOCK appears to have sus- ahead of making a lump sum payment. But
tained losses of KES1.3bn ($11.96mn) in the first in August, he said, KCB retreated from the
half of 2020, up from the KES300mn ($2.76mn) agreements and demanded that the company
loss reported in the same period of last year. It pay off its debts.
also owes its suppliers KES628mn ($5.78mn) Under these circumstances, he said, NOCK
and has seen shareholder equity drop from KES- cannot survive without government help. “As
1.62bn ($14.9) to KES280mn ($2.58mn) during a way forward, the [government should] con-
the last year, they said. sider providing funds to finance working capital
Gideon Morintat, NOCK’s CEO, said at the requirement for financial year 2020/2021, esti-
hearing that the company needed a bailout from mated to be KES3bn [$27.59mn]. This can be
the government. With KES3bn ($27.59mn) staggered,” he was quoted as saying by Business
in emergency funding, NOCK could cover its Daily.
KES628mn ($5.78mn) worth of obligations to As of press time, Kenya’s government had not
suppliers and offset the KES5.3bn ($48.75mn) responded directly to NOCK’s request for addi-
worth of principal and interest owed to two tional money. However, members of the Senate,
creditors, he said. He named those two creditors the upper chamber of Parliament, did order
as the Kenyan Central Bank (KCB), which has Auditor-General Nancy Gathungu to carry out
extended a loan of KES3.8bn ($34.95mn), and a forensic audit of the company’s unpaid debts.
Stanbic Bank, which has extended a KES1.5bn No word was available on when that audit might
($13.8mn) loan. be completed.™

PETROCHEMICALS

Aramco downsizes oil-to-

chemicals project

SAUDI ARABIA SAUDI Aramco and its newly acquired petro- production projects. It marks the first time the
chemicals arm SABIC are looking to downsize a crude-to-chemicals scheme has been adjusted
Aramco will integrate plan to build a $20-30bn oil-to-chemicals com- since the coronavirus (COVID-19) pandemic
the chemicals units plex in the kingdom’s western port city of Yanbu. started.
with existing facilities Aramco and Sabic agreed on the project in Aramco, despite boasting the lowest oil pro-
rather than building November 2017, estimating it would process duction costs in the world, still saw its profits
new ones. 400,000 barrels per day (bpd) of crude to pro- slump 73%in the second quarter to SAR24.6bn
duce 9mn tonnes per year (tpy) of chemicals ($6.6bn) as a result of the collapse in prices.
and base oils. That would make the complex the In August it announced it would slash its cap-
largest of its kind in the world. It is due to start ital expenditure for 2020 from $25-30bn to
up in 2025. $20-25bn.
However, the pair said on October 18 they The national oil company (NOC) completed
were considering integrating Aramco’s existing its $69bn acquisition of a 70% stake in SABIC
refineries in Yanbu with a mixed feed steam from Saudi Arabia’s sovereign wealth fund in
cracker and derivative olefins units. The scope June, as part of an ambitious downstream push.
is being reassessed “to maximise the economic But the deal has increased its exposure to what is
value while evaluating the optimal technical currently a very bearish market. Even before the
options and market risks,” SABIC said in a filing pandemic, prices for petrochemicals goods were
on the Saudi bourse on October 18. falling amid weaker-than-expected growth in
The shift in plans comes as oversup- key markets and new supply coming on stream.
plied oil and petrochemicals markets have SABIC suffered its third quarterly loss in a
forced operators in both areas to re-evaluate row in the three months ending June 30. ™

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