Business Daily (Nairobi)
Zeddy Sambu
4 June 2008
State-owned National Oil Corporation of Kenya has acquired 33 additional filling stations as it seeks to wrestle an influential market share from oil majors.
NOCK has acquired Somken in a deal whose value could not be immediately established just days after it emerged that the government was pulling the strings to have it acquire 72 stations held by Chevron Corporation at a cost of Sh3 billion.
Chevron trades in Kenya as Caltex. "National Oil has acquired 33 additional stations from Somken Petroleum Company Ltd. The new stations will enable National Oil to reinforce its presence throughout the country," managing director, Mwendia Nyaga, announced yesterday.
Mr Nyaga said the stations would particularly reinforce presence in western Kenya and the Coast region through outlets in Kisumu, Eldoret, Mombasa, Kibwezi, Sultan Hamud and Londiani. Somken is one of the 35 independent petroleum dealers formed soon after the liberalisation of the oil business in 1994. Somken has not been trading for a while and its outlets were being operated by Petro Oil Kenya, a player with roots in the ocean port of Mombasa.
The new acquisition by NOCK is part of the company's three year plan to raise its market share. It targets over 100 outlets in that period, with the government having assigned it a role of stabilising prices in the facing of record crude prices.
NOCK's success in this is heavily dependent on as broad a national network as possible and ability to source petroleum products from the cheapest markets, one of them being Venezuela that has on several occasions has been touted by Energy minister Kiraitu Murungi.
NOCK has played to this script adding 34 stations to its network in the past one year, up from six in 2003. That has raised its market share from 0.6 per cent share to five per cent presently.
In February, NOCK launched an additional 12 service stations it acquired from Kenya Shell, as the company spread its presence to new areas. The latest acquisitions will raise the company's total to 67 stations. The sale is expected to be concluded by month end.
Last February , NOCK launched an additional 12 service stations it acquired from Kenya Shell, as the company spread its presence to new areas.
The latest acquisitions brings the company's total to 67 stations when the sales details-that are still highly Somken, together with NOCK, Petro Oil and Triton started off in importation and distribution before substantial investments into retail outlets.
The local retail market is highly competitive with 33 players. Statistics for the four month trading period ended April 30 2008 by the Petroleum Institute of East Africa( PIEA), shows the five biggest oil marketers are Kenol (22.73 per cent), Kenya Shell (22.47 per cent), Total (19.27 per cent), Caltex (13.04 per cent) and OiLibya (7.8 per cent).
Next month, NOCK is set to unveil a five-year strategic plan with establishing more retail stations, diversifying into supplying major firms and expanding the product portfolio at the core of the blueprint.
"To complement the petrol stations launch, We will be launching new products including our own branded Liquefied Petroleum Gas and lubricants, bitumen and fuel oil," the MD said.
NOCK is banking on increased allocation, promised by the ministry in the national budget, to achieve the business plan, which includes aggressive entry into oil exploration and holding of reserves equivalent to one month consumption.
Mr Murungi also said the company has the option to source for additional financing from the capital markets and bring a strategic partner on board for the upstream activities.
"We expect the Government to provide some of the funds required while the difference will be sourced from the financial markets," said Mr Nyaga.
NOCK says it is also diversifying its sources of crude oil from parts of the Middle East and Venezuela.
"We are pushing for concessionary rates. The agreements have delayed but we hope to secure parliamentary approvals soon," said Mr Murungi adding that talks are ongoing, with Sudan to also provide cheaper crude.
According to the Commissioner of Monopolies and Prices independents oil marketers control 48.6 per cent of the local retail market against 51.4 per cent for multinationals.
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