KenolKobil Targets African Expansion Amid Kenyan `Government Interference'
KenolKobil Ltd., a Kenyan fuel retailer that operates in nine African nations, said it plans to make acquisitions in four more countries as part of a strategy to expand outside its home market.
KenolKobil, based in Nairobi, is targeting the Democratic Republic of Congo, Namibia, Djibouti and Malawi, Patrick Kondo, head of mergers and acquisitions at the company, told reporters at a briefing today.
“Some of them are at an advanced stage, some of them are in the early stages,” he said.
KenolKobil, which has a 25 percent share of the Kenyan oil market, is expanding abroad amid what it calls “government interference” in the domestic oil industry. It has operations in Kenya, Uganda, Tanzania, Rwanda, Burundi, Zambia, Ethiopia, Mozambique and Zimbabwe.
The state-owned Kenya Pipeline Co. was ordered by the country’s High Court in February to pay KenolKobil 5.2 billion shillings ($61.7 million) without interest for contravening a transportation and storage agreement.
In October, KenolKobil said it settled a four-year dispute on pending claims against Kenya Petroleum Refineries Ltd., in which the government holds a 50 percent stake, over processing fees. KPRL said it was owed 600 million shillings by KenolKobil, which in turn said it was owed 5.3 billion shillings as a result of losses incurred after KPRL withheld refined oil and prevented two ships from delivering crude ordered by KenolKobil.
Markets outside Kenya are “where we believe we can get a reasonable return on our investment without interference,” Managing Director Jacob Segman told reporters today. “Over time, Kenya is losing its net contribution to the bottom line.” He declined to say what proportion of the company’s current profit is generated outside Kenya.
Last year, KenolKobil announced plans to expand in Zimbabwe and Mozambique. The company has since acquired a 21,000 cubic- meter (741,608 cubic-feet) storage depot at the Mozambican port of Beira, and a liaison office in Harare, the Zimbabwe capital, Kondo said. Initial operations in the two countries will involve importing fuel in bulk and selling it to fuel-marketing companies, he said.
Kenya’s biggest fuel retailer by market value, KenolKobil last month acquired a fuel depot, a dry-goods warehouse and an office complex from Societe d’Importation et de Commercialisation de Petroliers in Burundi. In January, it bought the assets of Phoenix Uganda Petroleum Ltd., consisting of a fuel terminal, an office block and three gas stations.
In the 12 months through December, non-fuel products contributed 10 percent to KenolKobil’s net income. The company plans to grow that contribution to 25 percent over the next six to 10 years, Segman said.
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