Kenya Pipeline Company (KPC) is set to sell the stocks of 11 oil marketing companies (OMCs) in order to recover a debt of Sh2.15 billion.

The debt, which has remained unpaid for over six months, is part of a larger Sh10.07 billion credit that has been outstanding since June 2024.

KPC plans to dispose of the petroleum stocks that are part of the distribution pipeline in what is known as “line fill,” a term referring to the required amount of product within the pipeline for safe and efficient operation.

KPC had initially resorted to issuing reminders and suspending services to the 11 OMCs in an effort to recover the debt, but when those measures failed, the company opted for the sale of the stocks.

According to KPC's annual report, "Although a provision was made in the financial statements for long outstanding receivables, transportation service agreements (TSAs) with OMCs provide that after 45 days and upon notice to an OMC, KPC shall be at liberty to sell all such products and apply the proceeds of such sale in or towards the satisfaction of such lien and all proper charges and expenses in relation thereto."

The 11 OMCs involved in the debt dispute are not actively trading, but KPC has refrained from revealing their names due to confidentiality agreements.

The company also clarified that under the TSA, the "line-fill" acts as security for storage and transport services. Failure to provide this security means the OMCs will lose access to KPC's pipeline services.

The debt includes Sh5.54 billion owed by Kenol-Kobil, now part of Rubis Energie, which had a legal dispute that has now been settled.

In its latest financial year ending June 2024, KPC reported a net profit of Sh6.87 billion, a 52.6 percent increase from the previous year.

The company’s revenue grew by 14.6 percent to Sh35.37 billion, and administrative expenses were reduced, boosting the operating profit to Sh11.8 billion.

KPC paid the Treasury a Sh7 billion dividend from its pre-tax profit of Sh10.05 billion, a significant increase from the Sh5 billion paid the previous year.

Despite the ongoing debt issue, KPC continues to operate a 1,342-kilometer pipeline system with the capacity to transport 14 billion liters of petroleum products.

This infrastructure remains critical to Kenya’s energy distribution, as KPC is responsible for much of the country's petroleum transportation, storage, and distribution.