Unmasked: Kenya’s oil barons minting millions in the now lucrative trade
An attendant at a petrol station in Nairobi fuels a customer’s car.
What you need to know:
- In the first instalment of our series, The Oil Barons, Daily Nation reveals the multinationals making it big in oil imports to Kenya. Find out how oil gets to the pump, and why the procurement process has become a controversy that legislators were asked to investigate.
When the Narc administration of President Mwai Kibaki assumed power in 2002, the petroleum industry was a war zone, an illustration of Charles Darwin’s concept of survival of the fittest.
Oil dealers were free to import petroleum products from anywhere, and sell them at whatever price.
The obvious result was that companies would look to have the lowest pump prices by importing from the cheapest possible source, at times disregarding quality.
Also Read: Four firms picked to steady fuel supplies
Aside from the quality risk, there were no rules to govern fair competition. It was a chaotic market.
Radical changes in several sectors finally got to the petroleum industry on January 1, 2004 with the introduction of the Open Tender System (OTS).
Legislative amendments to Cap 116 of the Petroleum Act directed that the old way of importing fuel be abandoned for the OTS.
Under the OTS, the Energy and Petroleum Regulatory Authority (Epra) would license individual companies to import all the fuel products required for a particular month.
Other oil dealers would then buy fuel from the OTS winner and then sell it to the general public.
All dealers would access fuel from the winning bidder at the same price.
The new system had good intentions – to ensure a level playing field for all oil-marketing companies while regulating the quality of fuel consumed locally.
The Ministry of Energy and Petroleum was tasked with managing the OTS, and coming up with rules to govern the procurement process.
But nearly two decades down the line, the OTS is attracting more controversy than praise, owing to the clandestine management and limited release of information regarding importers and the bidding process.
Epra has licensed over 100 companies to import petroleum products through the OTS, but only less than 20 have consistently won the tender for years on end.
Data obtained from Epra officials on the OTS shows that Oryx Energies (Switzerland), Asharami Energy (Nigeria), Gulf Energy (France) and Gapco (France) are the most consistent foreign-owned companies that win OTS tenders.
The big local players with a somewhat guaranteed seat at the OTS high table are E3 Energy, Galana Oil, Texas Energy, Hashi Energy, Riva Petroleum Dealers, Petro Oil Kenya and Hass Petroleum.
The ownership status of another big player, Fossil Fuel Products, is unknown as its ownership records are unavailable at the Business Registration Service.
Records from the Ministry of Petroleum and Mining show that Gulf Energy will be the single largest importer of petrol to be consumed between mid-August and mid-September. It will import 170,752 cubic metres of the fuel.
Galana Oil and Texas Energy will each import another 85,124 cubic metres of petrol.
Last week Gulf Energy imported 73,710 cubic metres of aviation fuel that will cover the mid-July to mid-August period.
The company, owned by France’s Rubis Energy following a 2020 acquisition, had the lowest bid to supply petrol.
The French multinational stepped into the Kenyan market in 2017 when it incorporated Rubis Energy Kenya PLC.
Rubis Energy Kenya PLC first bought a 24.99 percent stake in KenolKobil, which was owned by the family of the late former Cabinet minister Nicholas Biwott.
Records at the Business Registration Service show that Rubis borrowed $50 million (Sh5.9 billion) in February 2019. The timing indicates that the money could have been used to finance its takeover of KenolKobil and Gulf Energy.
Two years later, Rubis bought out all other KenolKobil shareholders, parting with Sh36 billion for a branch network that extends to Uganda, Rwanda, Tanzania, Zambia, Burundi and Ethiopia.
Rubis then used KenolKobil to buy Gulf Energy and paid Sh15.2 billion for the business.
The French firm has, however, sued the previous Gulf Energy owners, seeking a Sh4.1 billion refund on the grounds that the acquired company’s books were cooked to inflate its value.
Rubis used aggressive data recovery techniques to mine deleted data from computers that were acquired from Gulf Energy during the takeover. Gulf Energy has cited privacy violations in its response to the suit.
Rubis Energie SAS, the parent company in France, is listed on Euronext Paris, the securities exchange in France’s capital. The parent firm is registered as a limited partnership.
A limited partnership involves individuals going into business together, but they are only financially liable up to the amount they have pumped into the venture.
Groupe Industriel Marcel Dassault, a company owned by the family of Marcel Dassault, is the largest individual shareholder. The Dassault family owns 5.75 percent of Rubis Energie SAS.
US-registered investment firm Tweedy, Browne owns five per cent of Rubis. UK-based firm BlackRock holds a 5.07 percent stake.
Rubis founder Gilles Gobin owns a 0.171 percent stake. Mr Gobin founded Rubis in 1990. He also controls a 1.132 percent stake through Sogerma, a management company. Sogerma is also listed as a Rubis partner.
Another company listed as a Rubis partner, Agena, owns 0.909 shares.
The multinational’s board of directors holds a 0.131 stake in Rubis.
Members of the supervisory board are Chantal Mazzacurati, Oliver Heckenroth, Nils Christian Bergene, Herve Claquin, Carole Fiquemont, Marie-Helene Dessailly, Laure Grimonpret-Tahon, Aurelie Goulart-Lechevalier, Marc-Oliver Lauren and Erik Pointillart.
The French government holds a 0.056 per cent stake, while the company’s employees have shares equivalent to 1.321 percent of Rubis.
Over 75 percent of Rubis shares are traded openly on Euronext Paris.
Kenya is among 41 countries across Africa, Europe and the Caribbean where Rubis has operations.
Oryx Energies SA, another regular OTS winner, is a Swiss multinational that has had a presence in Kenya since 2004.The Geneva-based company owns 99 shares in the Kenyan subsidiary.
Overseas Petroleum Holdings Limited owns one share. The registration details in our possession only show that it is a foreign company, but do not specify where the company is registered.
Oryx Energies SA is privately owned by the Addax and Oryx Group (AOG), which is registered in Malta.
In 2017, the International Consortium of Investigative Journalists (ICIJ) revealed the faces behind AOG when they released the Paradise Papers – a dossier of 13.4 million files detailing the offshore activities of national leaders, wealthy individuals and companies.
Individuals listed as shareholders are Canary Islands businessman Alejandro Roque, the family of former Nigerian intelligence chief Ali-Shinkafi Umaru, former Total Energies Asia managing director Emmanuel De Reynies, Oryx Energies SA CEO Moussa Diao, Oryx Energies SA Board chair Arnaud Jean Talabardon, and AOG insiders Hugues De Montauzon, Pierre Bottin and Laurence Heelein.
Others are Extraware GMBH managing partner Thierry Genthialon, Enterprise Power Limited founder Nikolai Germann, US-based Nigerian national Oladayu Oluchukwu Kusamoto, Lagos-based businessman Folake Adele-Adewole, Swiss national Isabelle Borel Warpelin, lawyers Vincent Labruyare, Frederique Dominique Lorencau, Peter Newman, Francois Jaclot, Afolabi Oladele and Michael Samuel Ebsray.
Several shadowy companies are also listed as shareholders.
Oryx Energies will ship in 171,280 cubic metres of kerosene expected to be consumed between mid-August and mid-September.
In the April-June cycle, Oryx featured prominently alongside another foreign-owned dealer, Asharami Energy, in the supply of petrol. Asharami shipped in 230,350 cubic metres of petrol.
Locally, the group trades as Asharami Synergy Limited. The firm was incorporated on April 27, 2014. The sole owner is Asharami Energy (Kenya) Limited, which holds all 100 shares.
Dubai-based Sahara Energy Resources DMCC owns 999 shares in Asharami Energy (Kenya) Limited. Nigerian national Adebola Adesanya Ewaoluwa, who is also the Asharami country manager, owns one share.
Sahara Energy DMCC is privately owned, making it difficult to confirm its shareholders and details submitted to the United Arab Emirates business registration body.
But data on Sahara’s website shows that the group’s original owners, who started operations in 1996, are Nigerian nationals who chose to have their parent company registered in Dubai.
“In 2009, Asharani became the first indigenous aviation fuel marketing company with an IATA strategic partnership in Nigeria,” Asharami Synergy’s website states.
The only other foreign firm that imported petroleum products in the April-June cycle was London-based Vivo Energy, which trades as Shell in African markets.
Vivo Energy set foot in Kenya slightly over a month before Kenya attained independence. Vivo Energy Kenya Limited was incorporated on November 3, 1963. Both firms listed as shareholders in the local subsidiary are companies registered in the Netherlands.
Vivo Energy Kenya Holdings BV owns 68,050,949 shares in the local subsidiary. Vivo Energy Uganda Holdings BV owns one share.
Both shareholders are subsidiaries of London-based Vivo Energy PLC, which has incorporated several other companies in the Netherlands that are used to own various operations in Africa.
Dutch energy dealer Vitol is in the process of acquiring all of Vivo Energy PLC in a deal that will see the former part with an estimated $2.3 billion (Sh272.4 billion).
In December 2021, the takeover faced opposition from some shareholders, stalling Vitol’s plans to control the Shell brand in Africa. There is no indication, however, that the takeover deal has collapsed.
This means buying out Nigerian-owned private equity fund Helios Investment Partners, which previously owned about 40 percent of Vivo Energy PLC.
Nigerians Tope Lawani and Babatunde Soyoye founded Helios in 2004. The fund previously owned 24.99 percent of Equity Bank before divesting.
One of Vivo Energy’s biggest rivals, Total Energies, occasionally throws its hat in the ring for fuel import deals.
Total Energies’ shares are traded on Euronext Paris. Interestingly, the company’s employees own 6.8 percent of Total Energies.
American investment firm Blackrock Inc owns 6.2 percent. About 87 percent of the company’s shares are traded on Euronext Paris.
While the firm runs its petrol stations under the Total Energies brand, the French multinational participates in the OTS under its subsidiary Gulf African Petroleum Corporation (Gapco).
Gapco was previously owned by two companies – India’s Reliance Exploration and Production, and Fortune Oil Corporation.
Total bought Gapco for an undisclosed fee in 2017. The French giant opted to stay out of the July-September OTS cycle, but has previously made billions importing petroleum products.
TOMORROW: The Kenyan tycoons minting billions from oil import deals. Read about locals taking on multinationals in the exclusive club of oil-rich investors. From the Chandaria family to Bomachoge Borabu MP aspirant Obadiah Barongo, find out which Kenyans have muscled their way into the most lucrative side of oil dealership locally.
