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THE EAST AFRICAN: Kenol takes over Shell operations in Rwanda market: “Kenyan oil company, Kenol, has acquired Shell's operations in Rwanda in a deal estimated to have cost Ksh850 million ($11.3 million).“: Posted Wednesday 7 December 2005



Special Correspondent


Kenyan oil company, Kenol, has acquired Shell's operations in Rwanda in a deal estimated to have cost Ksh850 million ($11.3 million).


Kenol/Kobil group managing director Jacob Segman said the acquisition would consolidate the company's presence in the Great Lakes Region, including Burundi and the Democratic Republic of Congo.


The deal signed last week, will see Kenol/Kobil control more than half the market share in Rwanda, where it ventured in 2002. 


Shell Rwanda runs 17 service stations, a fuel and lubricant business and a storage terminal with a storage capacity of 16,000 cubic metres, which is the biggest in the country, under a long-term lease from the government.


The move by Shell Rwanda follows a decision by Royal Dutch Shell Plc in the Netherlands, to divest from Rwanda. The takeover deal is expected to be concluded within a few weeks. 


The president of Shell Oil Products Africa, Iain Everingham, said the sale of the downstream business in Rwanda is consistent with Shell’s strategy of managing its portfolio to deliver maximum value to shareholders. He said the business would be sold as a going concern, with priority being to work with staff, customers, and shareholders to ensure a smooth transition. 


In Kenya, Shell operates a joint venture with BP, a subsidiary of UK's British Petroleum Plc. Last month, BP announced a restructuring programme that will see it exit from Kenya. It invited bids for its 50 per cent shareholding in three companies they jointly own with Shell. The other 50 per cent is owned by Shell Kenya.


The companies include Kenya Shell, BP Kenya and Shell & BP Malindi which was formed for purposes of acquiring Agip Kenya, the Italian transnational that sold its stake to Shell & BP five years ago. 


The exit was anticipated, especially after BP Shell sold its petrol stations in western Kenya in the run up to the 2002 general election, citing dumping of export fuel in the local market – a practice said to be rampant in the region. 


For Kobil, Rwanda offers a well regulated operating environment and promises stable returns. "We will continue to seek growth prospects through diversification, organic expansion and acquisitions," Mr Segman said last week.


Kobil's expansion has seen it establish subsidiaries in Uganda, Tanzania, Zambia and Rwanda. Early this year, the company established a subsidiary in Ethiopia, where one petrol station is already operating.


In Kenya, Kenol/Kobil has a turnover of Ksh55 billion ($700 million) and a retail network of over 150 service stations. It is the second largest company with a market share of 19 per cent behind Total Kenya that has 20.3 per cent.


Besides, Total Kenya, Kenol is the only oil marketing company listed on the Nairobi Stock Exchange, and had a market capitalisation of Ksh6.4 billion ($79 million) as at the end of last year.


As part of its growth strategy, Kenol/Kobil has established a trading desk to spearhead the development of new market in Africa.


Since its establishment in 2002, the African Trading Desk has won tenders to supply petroleum products in several African countries, the most significant of which is Mozambique. Kenol and Kobil are now eyeing diverse markets including Malawi, Sudan, Ethiopia, Mauritius and Zimbabwe.


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