The new acquisition comes within two years of the company’s purchase of the entire assets of Shell Rwanda in 2006, comprising 17 service stations and the largest fuel terminal in the country. Photo/ANTHONY KAMAU
Kobil Petroleum Rwanda, a fully-owned subsidiary of the Kenya’s Kenol Kobil Group, has consolidated its oil market leadership position by acquiring all the service stations of Stippag, a local petroleum company.
Two of the stations are situated in key locations in Kigali, while the other four are in major commercial centres around the country.
Only two months ago, Kobil Zambia, another Kenol/Kobil subsidiary, acquired a 15 per cent shareholding in Lublend Ltd from Total Zambia Ltd.
The acquisition was aimed at reducing operational pressure on the Changamwe-based lubricants blending plant, which will now concentrate on the growing Kenyan oil market and that of the landlocked countries in the region.
According to Edwin Kinyua, head of corporate affairs, the move is in line with the company’s strategy of consolidating its presence in Africa through strategic acquisitions and organic expansion.
The strategy, he says, has worked well for the group, and has seen it take its place among the leading players in the downstream petroleum business in Africa.
The new acquisition comes within two years of the company’s acquisition of the entire assets of Shell Rwanda in 2006, comprising 17 service stations and the largest fuel terminal in the country, followed in 2007 by the acquisition of 20 service stations belonging to a local company, KLSS.
Kenol/Kobil, adds Mr Kinyua, has designated Rwanda as the regional platform for further expansion into the Great Lakes region and Central Africa comprising the Democratic Republic of Congo, Burundi and northern Tanzania, which provides a large untapped market with significant growth potential.
Kobil Rwanda was incorporated in May 2002 with the aim of covering markets of Rwanda, Burundi and eastern Congo.
In 2005, the company introduced its K-Gas LPG brand, becoming the only major trader in this segment in Rwanda.
The acquisition is expected to boost the company’s performance in Rwanda, and substantially increase its retail volumes.
Last year, when Kenol bought the Shell stations, the company injected over Ksh75 million ($1.4 million) to upgrade, refurbish and re-brand the stations. In addition, the company has injected over Ksh100 million ($1.5 million) to put up a modern LPG facility in Rwanda, with a filling capacity of over 200 metric tonnes of LPG per month.
The plant mainly serves LPG requirements for Rwanda, Burundi, Eastern Democratic Republic of Congo and Western Tanzania. It is the second plant in the group’s planned network, with the first being a Ksh150 million ($2.27 million) modern filling plant in Nairobi a year ago.
In its initial expansion thrust, Kenol acquired its trading partner, Kobil Petroleum Ltd, and incorporated Kobil Ethiopia at the beginning of the year. Prior to the approval of the acquisition, Kenol and Kobil were operating under a joint working agreement.
Kenol being a publicly listed company means that the acquisition of Kobil, a player with a robust performance record, was expected to contribute substantially to the company’s bottom line.
In spite of the challenges, the company’s sales volumes increased by 52 per cent, with 27 per cent from Kobil and the balance resulting from expansion in Kenya and the region. Gross margins increased by 48 per cent, with Kobil contributing 36 per cent.
Between October 2007 and March this year, the oil industry has been hit by steep increases in oil prices, which have reached unprecedented levels, and extremely high freight-on-board premiums and sea freight charges. Supply constraints arising mainly from pipeline problems and poor storage capacity did not spare the company either.
This has been compounded by the indirect tax increases in some subsidiaries and the upfront payment system in Kenya and Tanzania, as well as non-recoverable value added taxes in Tanzania.
It was also expected that the company, now with a larger asset base, would negotiate more favourable borrowing terms from banks, which will allow it to tap other sources of finance.
In addition, it was expected that the company would have more negotiating power with overseas oil producers, and manufacturers of essential products such as base oils for the manufacture of lubricants.
