French oil major Rubis Energie says it voluntarily reduced the supply of aviation fuel to airlines in Kenya, cutting its overall sales volumes in Africa by seven percent in the third quarter.
The firm, in a trading update, said the move was part of optimisation of its aviation contracts in the country to cut costs without hurting its earnings.
The French firm’s local subsidiary, Rubis Energie Kenya, is one of the largest sellers of aviation fuel in the country.
It is unclear whether the firm’s decision was driven by the sharp increase in fuel prices since the breakout of the war between Russia and Ukraine in February that hit the oil industry with heavy costs.
Rubis sold 573,000 cubic-metres of its products including fuel, liquefied petroleum gas (LPG) and bitumen in Q3 in Africa, a 7 percent drop from the 619,000 cubic-metres it sold in a similar quarter last year.
“Most of the regional volumes decline (five percent) was due to optimization of the aviation contracts in Kenya to improve the margins and with no dilutive impact on gross profit,” said Rubis.
This is despite a rebound in the aviation sector driven by the lifting of Covid-19 travel restrictions which increased demand for aviation fuel by 20 percent in the first half of the year.
Local air travel also shot up this year due to increased campaign activities ahead of the August polls.
Data from the Energy and Petroleum Regulatory Authority (Epra) shows that choppers and commercial jets consumed 361.69 million litres of fuel in the six months to June compared to 298.96 million litres in a similar period last year.
Rubis adds that its East Africa subsidiaries have embarked on an expansion spree targeting the fuel retail market.
The firm says its strategy is already yielding fruits as regional subsidiaries have seen a 25 percent increase in volumes sold through service stations.
Rubis, which owns the popular K-Gas brand, is eyeing more investment in LPG sales in the region owing to the sharp growth in consumption of the fuel.
The company is also betting on the growing appetite for large infrastructural developments in the region especially road construction to boost its bitumen sales.
“In the mid-and long-term, the Group set to leverage on numerous growth drivers in Africa (which has) a growing population and growing energy demand,” said the firm.
“Rubis set to benefit from portfolio improvement in Eastern Africa, exposure to bitumen in view of long-term need for the infrastructure development, as well as solid position in LPG business which is seen as a transitional energy in the continent.”
