31 December 2012

Uganda: Engen Bought For U.S.$16.8 Million

Oryxoil and gas, a subsidiary of Switzerland's Addax and Oryx Group, has bought Engen Uganda Ltd for about US$16.8 million, according to Deep Earth International.

It bought shares from Engen Cape town in Mid November to take over Engen Uganda Ltd as part of its interest in developing its downstream business in Africa.

The share buying deal was completed on Nov. 23 though there are no details of the deal on both the Oryx oil and Engen websites. The group wants to expand its downstream energy offering in Sub Saharan Africa. It will take over ten Engen Uganda Ltd service stations and rebrand them as Oryx. In Uganda, the group also wants to invest significantly in liquefied petroleum gas infrastructure especially in rural areas.

The group is waiting for a response from the registrar of companies concerning the Share Purchase Agreement (SPA). Engen dealers in this period are out sourcing for fuel products but trying to sell off the Engen lubricants.

A source in Oryx Oil says lack of supply synergy could have contributed to Engen's failure to breakeven. The source says Oryx oil Uganda will report to its counterparts in Kenya when the SPA is approved.

There has been speculation due to mergers and acquisitions in the petroleum downstream industry in Africa and Uganda has had several of them.

Engine started operations in Uganda in 2003. Mid this year it announced that it was restructuring its African operations, and that it would close its Uganda unit. The company did not offer any details of whether it would sell its Uganda franchise despite interest. The employees threatened to sue the company over breach of contract.

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