For instance, in mid-June, the exchequer asked OMCs to subscribe to a re-opened three-year bond, handing marketers a coupon of 14.228 percent payable every six months with the final settlement falling in three years-time including the principal owed which would be the effective arrears owed to respective OMCs.
The reopened bond had subscriptions totalling Sh18.5 billion, which was inclusive of bids from other investors with interest in the paper.
“We came to the decision that we could securitise half of it in the next financial year and the other half in this fiscal year,” Treasury Cabinet Secretary Prof Njuguna Ndungu said last week.
At the end of President Uhuru Kenyatta’s administration, Treasury said oil marketers were owed a total of Sh83 billion, which was whittled down leaving behind a balance of Sh43 billion.
As of June, Vivo which runs Shell-branded service stations, was owed the bulk of the arrears at Sh13.5 billion ahead of Total (Sh8.2 billion), Rubis (Sh4 billion), Oryx (Sh3.5 billion) and Ola (Sh2.3 billion).
Arrears to other oil marketers were at the time estimated at Sh14.4 billion according to data from the Ministry of Energy.
By having the OMCs roll over their pending receipts from the government, the exchequer will technically dissolve the arrears to oil marketers who will now be entitled to a redemption equal to the value of their original balances at the end of the bond holding period.
This is whilst the OMCs earn interest from the bond.
