Uganda National Oil Company (UNOC) invested over UGX 918 billion in the recently concluded initial public offering (IPO) of Kenya Pipeline Company (KPC), marking one of the region’s largest state-linked cross-border infrastructure transactions this year.
UNOC confirmed that it acquired 31% of the shares offered to the public in the IPO, which closed on Tuesday.
The acquisition translates into an effective 20.15% shareholding in KPC. The remaining 35% of KPC that was not floated was retained by the government of Kenya.
This means UNOC now controls close to a quarter of the overall shareholding in the pipeline company, positioning it as one of the most significant shareholders in the entity.
The investment positions Uganda as a major shareholder in one of East Africa’s most strategic energy infrastructure companies, deepening Kampala’s commercial and operational footprint within the regional petroleum supply chain.
UNOC Chief Executive Officer Proscovia Nabbanja said the transaction was based on straightforward financial considerations.
“There was no price discount,” she said, emphasising that the deal provided UNOC with numerous strategic concessions tied to broader cooperation arrangements between the two petroleum entities.
She explained that only 65% of KPC’s total shares were floated to the public, meaning UNOC’s 31% purchase applied strictly to the publicly offered portion.
Kenya Pipeline Company KPC issued 11.8 billion shares in the IPO. UNOC purchased approximately 3.66 billion shares at KSh9 per share, bringing the total transaction value to about KSh32.96 billion.
At prevailing exchange rates, the investment is equivalent to roughly $255.7m, or about UGX 918 billion.
Strategic regional investment
KPC’IPO places one of East Africa’s most strategic infrastructure assets before investors, backed by nearly five decades of steady operations and regulated cash flows.
The company’s backbone was laid in 1978 with the commissioning of the original Mombasa–Nairobi pipeline, creating a secure channel for petroleum products from the coast to the capital.
Over the years, the network stretched westward to Eldoret and Kisumu, anchoring the Northern Corridor trade route and enabling land-linked economies to access refined fuel products efficiently.
In 2018, Line Five, a higher-capacity 20-inch pipeline from Mombasa to Nairobi, was completed to improve efficiency and throughput.
The original line was retired in 2020 after surpassing its design life. In 2023, KPC consolidated Kenya Petroleum Refineries, expanding its coastal storage footprint and reinforcing its position as a regional logistics hub.
Today, the company operates a storage capacity of more than 1.1 million cubic metres across Kenya. Its strategic importance extends well beyond national borders.
Regional petroleum demand is estimated at 13 million cubic metres annually, comprising roughly 5.8 million cubic metres for Kenya’s domestic market and 7.5 million cubic metres for transit markets.
Export and transit volumes account for just over half of total throughput, with Uganda representing the majority of this regional flow.
In practical terms, the pipeline network keeps fuel moving into Uganda and onward to Rwanda, Burundi, and eastern DR Congo, cementing Kenya’s position as the energy gateway to the region.
For Uganda, whose annual petroleum demand stands at approximately 2.96 billion litres and continues to grow at about 7% per year, this infrastructure is not optional.
More than 95% of Uganda’s petroleum imports pass through the port of Mombasa and rely on Kenya’s pipeline and storage system before being trucked into the domestic market.
That structural dependence explains why Kampala moved decisively when Nairobi opted to partially privatise the company through a listing on the Nairobi Securities Exchange (NSE).
The government of Kenya converted KPC into a public limited company this January by offering 11,812,644,350 ordinary shares, representing 65% of the issued shares, while retaining a 35% stake.
Uganda, through UNOC, secured a 20.15% strategic shareholding, which Energy and Mineral Development Minister Ruth Nankabirwa described as both commercial and strategic.
Nicholas Mukasa Appointed Bank of Namibia Deputy Governor“This is about safeguarding Uganda’s energy security, affordability, and accessibility of petroleum products,” she said at a media briefing.
“Cabinet was satisfied that the participation of UNOC in KPC provides satisfactory guarantees and protections to secure Uganda’s long-term interests.”
She also emphasised that the IPO and subsequent trading of KPC shares on the NSE are of significant strategic importance to Uganda, reinforcing bilateral cooperation with Kenya and advancing regional integration under the East African Community framework.
KPC’s shift toward privatisation had previously raised concerns in Kampala that future governance could tilt toward profit maximisation by private investors.
That, officials feared, could affect tariff structures, dividend policies, and other operational decisions critical to Uganda’s fuel supply chain.
To mitigate those risks, Uganda negotiated a series of strategic concessions alongside its equity stake.
Through engagements between the two governments, backed by the President of Uganda, the Ministry of Finance, and the Attorney General, several key protections were secured.
These include a guaranteed 20.15% shareholding and veto power over changes to pipeline tariffs.
Uganda also secured the right to appoint at least two directors to the KPC board, veto power on revisions to the company’s dividend policy and veto authority over material changes to the business plan.
Additional safeguards include protection against dilution through a veto power over changes in share capital and a veto authority over alterations to the Memorandum and Articles of Association.
Collectively, these concessions give Uganda influence that goes beyond its numerical shareholding.
Nankabirwa underscored that these provisions were central to Cabinet’s approval.
“We negotiated protections that ensure Uganda will not be exposed to unilateral decisions that undermine our energy security,” she said. “This investment strengthens our commercial position while guaranteeing stability in petroleum supply.”
Financial performance
Financially, KPC presents the profile of a mature utility with scale and resilience.
Revenue rose from KSh28 billion in the financial year 2021 to KSh38.6 billion in the financial year 2025.
In the year ended June 2025, revenue stood at KSh38.59 billion, generating a gross profit of KSh23.86 billion and an operating profit of KSh11.93 billion.
Profit after tax was KSh7.49 billion, while net cash from operating activities reached KSh14.26 billion, underscoring the strength of its tariff-based model.
Total assets stood at KSh139 billion against liabilities of KSh40.6 billion, reflecting a relatively solid balance sheet.
Interim unaudited results for the quarter ended September 30, 2025, show revenue of KSh10.4 billion, up 9.6% year on year, with operating profit of KSh5.3 billion and cash balances rising to KSh16.3 billion.
Management forecasts revenue growth at a compound annual rate of 10.4%, reaching KSh68 billion by 2030, supported by rising regional demand and planned capital investments of about KSh110 billion.
Risks remain, notably tariff regulation, execution of expansion projects, and environmental and legal exposures.
Even so, the listing offers exposure to a cash-generating national asset that quietly fuels much of East Africa. For Uganda, the acquisition is not merely a portfolio investment.
It is a calculated step to anchor its petroleum supply chain within a structure where it holds both equity and strategic safeguards, positioning the country more securely as it prepares for oil production in the years ahead.
