The Kenyan government plans to raise approximately KSh 106.3 billion by selling a 65% stake in Kenya Pipeline Company, providing a rare non-debt source of funding to bridge the FY2025/26 budget gap amid delays in external financial support.
The Information Memorandum notes that all proceeds from the initial public offering (IPO) will go directly to the National Treasury, contributing to the approved fiscal year financing plan. The State is reducing its stake in the fuel transporter ahead of the planned March listing on the Nairobi Securities Exchange.
Kenya’s FY2025/26 budget anticipates total expenditures of KSh 4.2-4.3 trillion, against expected revenues and grants of around KSh 3.3-3.4 trillion, resulting in a fiscal deficit of roughly KSh 923-932 billion, equivalent to about 4.8% of GDP. Treasury documents indicate that this gap will be largely covered through KSh 635.5 billion in net domestic borrowing and KSh 287.7 billion in net external borrowing.
Pressure on external financing has increased following the conclusion of Kenya’s $3.6 billion IMF programme in April 2025, with negotiations for a successor arrangement still ongoing. The FY2025/26 budget excludes IMF support, heightening reliance on domestic debt and alternative funding sources. Analysts and officials warn that delayed or absent IMF assistance restricts fiscal space, making asset sales and other non-debt measures more critical.
Strategic Context
The Kenya Pipeline IPO is part of a broader strategy to monetise State assets, funding the budget without increasing public debt. The offer involves selling 11.81 billion existing shares at KSh 9.00 each, with no new shares issued. Structured solely as an offer for sale, the IPO does not inject capital into Kenya Pipeline; all proceeds will flow directly to the Exchequer, leaving the company’s balance sheet unaffected.
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This sale aligns with other planned asset monetisations, notably the partial divestment of the government’s stake in Safaricom PLC. Proceeds from Safaricom are intended for the National Infrastructure Fund to finance priority projects in energy, transport, water, and digital infrastructure, easing pressure on the development budget and reducing dependence on borrowing or direct Exchequer funding.
Post-IPO, the National Treasury will retain a 35% stake, subject to a 24-month lock-in period mandated by Parliament through Sessional Paper No. 2 of 2025. During this period, the remaining shares cannot be sold, transferred, or diluted. Following the listing, Kenya Pipeline will no longer be classified as a State corporation under the State Corporations Act, with oversight transferring to the Capital Markets Authority and the Nairobi Securities Exchange under the Companies Act.
Combined, the Kenya Pipeline IPO and Safaricom divestiture reflect a fiscal approach prioritising domestic resource mobilisation and asset recycling to support development spending amid constrained external funding. This strategy allows the government to invest in infrastructure while controlling public debt growth and managing domestic bond market liquidity.
Trading of Kenya Pipeline shares is expected to begin on March 9, 2026, pending regulatory approvals and completion of the IPO process, marking a shift in how the State finances its budget, replacing some borrowing with revenue from commercial asset sales amid tighter global and domestic funding conditions.
