Kenyan clean-cooking innovator Koko Networks has entered administration following its failure to secure essential government approval for international carbon credit sales. PricewaterhouseCoopers (PwC) has been appointed as the administrator and is now actively seeking buyers for the company's business or its assets. The collapse has resulted in over 700 job losses and casts uncertainty over the future of clean energy access for more than 1.5 million households.
The Collapse of a Clean-Cooking Pioneer
KOKO Networks established a vast ecosystem designed to replace harmful charcoal use in urban Kenyan homes. The company supplied affordable bioethanol cooking fuel through a dense network of over 3,000 high-tech "KOKO Fuel ATMs" in local shops. This innovative distribution model successfully reached more than 1.5 million households, offering a cleaner and more modern energy alternative.
The company's financial viability was fundamentally linked to the generation and sale of carbon credits. Revenue from these credits, earned by reducing carbon emissions, was used to heavily subsidize the cost of stoves and fuel for consumers. This non-government subsidy was crucial for making the transition to bioethanol affordable for even the poorest families in Kenya.
A Critical Regulatory Hurdle
The company's operations came to an abrupt halt due to a critical regulatory roadblock. To sell its carbon credits in the high-value international compliance markets, KOKO required a Letter of Authorisation from the Kenyan government under Article 6 of the Paris Agreement. This indispensable approval was ultimately denied, severing the company's primary revenue stream and forcing it into insolvency.
The government justified its decision by expressing concerns that KOKO's project was too large in scale. Officials argued that approving the request would have allowed a single company to exhaust Kenya’s entire share of available carbon credits. This, they contended, would unfairly lock out other vital sectors of the economy, such as agriculture and manufacturing, from participating in these markets.
The Path Forward Under Administration
The immediate fallout from the company's collapse included the dismissal of more than 700 employees. Joint administrators from PwC, Muniu Thoithi and George Weru, have assumed full control of all financial and operational decisions. Their primary objective is to explore options for rescuing the business as a going concern or otherwise securing the best possible outcome for creditors.
In an effort to recover value, PwC has formally invited expressions of interest from potential acquirers. The assets on offer include KOKO’s extensive nationwide fuel distribution infrastructure, proprietary software, intellectual property, and its fleet of vehicles. This process aims to attract investors capable of either reviving the business or repurposing its valuable components.
Reviving the company will require a significant injection of new capital to address its insolvency sustainably. KOKO had already invested approximately $300 million in its Kenyan operations, which were previously insured against political risk by the World Bank's Miga. The administrators are now tasked with navigating this complex financial situation to determine a viable path forward for the troubled startup.
The predicament of KOKO Networks serves as a stark example of the collision between innovative climate finance models and sovereign economic priorities. The future remains uncertain for the company, its former employees, and the millions of Kenyans who relied on its affordable clean energy solution. This case will undoubtedly influence future investment in Kenya's carbon market, highlighting the critical importance of regulatory alignment for sustainable business operations.