Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Total’s Kenya Unit Rallies on Refinery Stake Sale: Nairobi Mover

Oct. 7 (Bloomberg) -- The Kenyan unit of Total SA rallied to a two-year high after the sale of part of the country’s lone oil refinery prompted expectations that a new investor will buy into the crude processor and improve its operations.

Total Kenya Ltd. jumped 7.3 percent to 22 shillings by the close in the capital, Nairobi. That’s the highest since August 2011. More than 20,000 shares were traded, equivalent to 1.3 times the three-month daily average. Rival gasoline retailer KenolKobil Ltd. advanced as much as 5.6 percent before closing unchanged at 8 shillings.

Essar Energy Plc of India said Oct. 3 it will sell its 50 percent stake in Kenya Petroleum Refineries Ltd. to the government after studies showed upgrading the plant isn’t economically viable. Outdated equipment and a lack of investment in maintenance means it costs at least 6 percent more to process fuel at the 50-year-old refinery than to import it, according to the company.

“What Total and Kenol would want to see is a revamped refinery and another player coming to the market would be the answer to that,” Muammar Ismaily, head of research at Nairobi-based Genghis Capital Ltd., said by phone today.

Kenyan fuel retailers are obligated to buy about 40 percent of their supplies from KPRL. The refinery said in April it’s considering raising $1 billion of debt and equity for a planned upgrade of the facility to boost processing capacity to 4 million metric tons a year by 2019 from 1.6 million tons.

The “efficiency” of Total and KenolKobil “is compromised by the refinery, so if they can get a strategic buyer with a long-term view to improve its operations, it will be good for both of them,” Eric Munywoki, a research analyst at Nairobi-based Old Mutual Securities Ltd., said by phone.

Last month Genghis set a price target of 23.96 shillings for Total and rated it buy while KenolKobil was also rated as buy in new coverage with a price target of 10.91 shillings.

Total’s shares gained 59 percent this year, outpacing KenolKobil, whose stock has dropped 41 percent, the worst performer on the FTSE NSE Kenya 25 Share Index.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.