GAZETTE NOTICE NO. 14058

PURSUANT to the provisions of section 25 of the Competition Act, (Cap. 504), (“the Act”), the Competition Authority of Kenya (“the Authority”) notifies the public that the National Oil Corporation of Kenya Limited (NOC) and Rubis Energy Kenya PLC (Rubis) have made an application for exemption on certain sections of the Act with regards to potential Restrictive Practices for a period of eight (8) years, with respect to a proposed non-equity Strategic Partnership Agreement (between NOC and Rubis). The overall objective of the non-equity Strategic Partnership Agreement is to unlock the financing of NOC Downstream Business by Rubis in order to grow the value of NOC’s Downstream Business as measured by the profitability attributable to the Downstream Business through enhanced modernisation and expansion of NOC’s retail outlets, growth in sales volumes and increased market share. The non-equity Strategic Partnership Agreement is in furtherance of the Cabinet Directive of the 8th August, 2023, which among others approved the revival and commercialisation of NOC through the restructuring of NOC and the onboarding of a non-equity strategic partner that would unlock financing and ultimately return NOC to profitability. As a non-equity strategic partner, Rubis will avail financing to NOC for modernization and expansion of NOC’s downstream infrastructure, deploy a robust ERP System for effective controls and provide capacity building and management support. In particular, NOC and Rubis are seeking to be exempted with respect to entering into a non-equity Strategic Partnership Agreement which would involve coordination on a number of aspects of the services offered with respect to the following clauses: (i) Structure of the non-equity Strategic Partnership: Clauses 3.2, 3.2.1 and 3.2.2 of the agreement prohibit NOC from discussion, acceptance of proposals, offer or accept entering in merger, joint venture discussion, purchases of equity, purchases of assets, issuance of debt, tender offer or otherwise without prior immediate notification to Rubis. (ii) Rubis’ Roles and Responsibilities: Clauses 8.2, 8.9, 8.10 and 8.12 of the agreement provide that Rubis shall deploy the Enterprise Resource Planning (ERP) system, support NOC to manage the downstream business, through the Joint Implementation Committee (JIC), approve decisions in relation to changes to the strategic directions of NOC’s downstream business and upon approval by JIC, undertake procurement on behalf of NOC in relation to all Capex projects. (iii) Establishment of a Joint Implementation Committee: Clauses 10, 10.1, 10.51, 10.6.1 and 10.7 of the agreement provide that the parties shall constitute a joint implementation committee comprising of Chief Executive Officer of NOC, Group Managing Director of Rubis, select heads of departments and that JIC shall determine staff organizational structure and make key decisions of NOC downstream business. (iv) Deployment of the ERP System: Clauses 13.5.3 and 13.6 of the agreement provide that NOC shall use the Rubis procured vendor certified partner to manage the ERP System and that Rubis shall have access rights to the system. (v) Business Growth, Development and Marketing Support: Clauses 15.1, 15.2, 15.4.7 and 15.4.8 of the agreement provide that; the parties shall jointly coordinate in undertaking business growth, Rubis shall provide NOC with technical support in undertaking business growth, development and marketing, Rubis shall provide technical and specialised, training of NOC sales and marketing personnel and any other function that NOC requires capacity building. The parties will collaborate in adopting current and emerging trends in the downstream business, including without limitation, the installation of electric charging infrastructure, any other form of renewable energy Liquefied Petroleum Gas (LPG) reticulation and autogas. (vi) Management Support, Capacity Building and Development: Clauses 16.1, 16.3, 16.4, 16.5, 16.6 and 16.9 of the agreement which provides for management support, capacity building and development including joint training and secondment of staff, outsourcing of operations in certain aspects of management to Rubis vide a separate management service agreement to be agreed upon, alignment of organizational structure, and staff exchange. (vii) Fuel Card: Clauses 17.1, 17.4.2 and 17.4.3 of the agreement provide that in relation to NOC’s Downstream Business the parties shall deploy common fuel card, joint marketing of fuel card and joint reconciliation of transactions. THE KENYA GAZETTE 25th October, 2024 (viii) NOC Brand: Clauses 19.1.2, 19.2.1 and 19.1.4 of the agreement provide that the parties acknowledge and agree that in providing technical support, Rubis may come into possession of, or support NOC in generating confidential information and NOC Intellectual Property and that Rubis agrees that it shall not disclose or reproduce the Confidential Information of NOC. The parties may also consider branding of fleets of transportation trucks with the logos and/or trademarks of both parties. (ix) Information Rights: Clause 23.1 of the agreement provides that NOC shall supply Rubis with the financial information necessary to keep Rubis informed about how effectively NOC’s Downstream Business is performing. The above conduct, if not exempted, will qualify as contraventions under the Act, hence the application for exemption. All interested parties are required to submit any written representations, if any, with regard to this application within thirty (30) days of the publication of this notice. Submissions may be made through the email address info@cak.go.ke or the CAK portal https://competition.cak.go.ke:444 under submissions. Dated the 23rd October, 2024. DAVID KEMEI, MR/6539653 Director-General.