Kenya defends $327 million Dangote pipeline deal after backlash

Kenya’s Treasury Cabinet Secretary John Mbadi has defended the sale of a 24.76% stake in Kenya Pipeline Company to Nigerian billionaire Aliko Dangote, dismissing allegations of political interference surrounding the $327 million transaction.

Speaking to Citizen TV, Mbadi described the sale as a commercial transaction between willing sellers and a willing buyer. He also warned politicians against making statements that could discourage foreign investors from investing in Kenya.

“Those who held the shares decided democratically to sell the shares, and there is nothing wrong with that. This is a commercial transaction,” Mbadi said, according to Citizen Digital’s October 22 report.

His comments followed criticism from Ndindi Nyoro, an opposition politician who questioned the role of state-backed institutions in the transaction. Nyoro alleged that public institutions had been directed to purchase shares during Kenya Pipeline Company’s initial public offering before selling part of their holdings to Dangote’s interests. Those allegations have not been independently established.

Dangote confirmed the acquisition on October 21, saying his group had purchased approximately a quarter of the petroleum transporter. The transaction involved about 4.5 billion shares and was valued at 42.5 billion Kenyan shillings, equivalent to approximately $327 million. Billionaires.Africa previously reported on Dangote’s acquisition of the Kenya Pipeline Company stake.

The transaction involved shares held by state-linked institutions following the company’s initial public offering earlier this year. The government’s offering raised 103.45 billion shillings, with the proceeds earmarked for infrastructure investment through Kenya’s National Infrastructure Fund.

The sale has attracted scrutiny because public institutions and pension schemes absorbed a substantial portion of the IPO after demand from private investors proved weak. Thirteen state-backed schemes and agencies reportedly invested a combined 64.23 billion shillings in the offering.

Mbadi rejected the suggestion that the transaction demonstrated improper political influence, arguing that Dangote had purchased shares through the stock market at a price slightly above the IPO price. However, the difference between the purchase and sale prices alone does not establish the final returns earned by the institutions after fees and other costs.

The acquisition also fits into Dangote’s broader plans to expand his energy business across East Africa. The industrialist is developing a proposed refinery in Lamu, Kenya, and has outlined plans to build distribution infrastructure serving markets beyond Nigeria.

Kenya Pipeline Company operates an extensive network transporting petroleum products from the port of Mombasa to inland markets. Its infrastructure could become increasingly important as Dangote pursues a larger role in regional fuel refining, storage and distribution.

The government’s defence addresses the political criticism surrounding the share sale, but questions about transparency, institutional investment decisions and the financial outcomes for public shareholders remain relevant to the wider debate over Kenya’s privatisation programme. (Billionaires Africa)