22 February 2017

East Africa: Tanzania Firm Cleared to Buy Kenya Oil Unit

Photo: The Citizen
Hashi energy.

Nairobi — Tanzania's energy firm Lake Oil is set to acquire the petroleum retail business of Hashi Energy in Kenya.

The acquisition will add to Lake Oil's existing gas distribution business in Kenya.

"It is notified for general information that the Competition Authority of Kenya has authorised the proposed acquisition of the retail petroleum business of Hashi Energy Limited by Lake Oil Limited," the regulator said in a notice.

The value of the impending transaction was not disclosed. Lake Group has operations in the region including Zambia, Rwanda and Burundi and deals in petroleum distribution as well as cement manufacturing. The company also runs an inland container depot in Tanzania.

The transaction will see Lake Oil inherit Hashi's market share in local volume sales which stood at 3.7 per cent in the nine months ended September 2016.

This made Hashi the seventh-largest oil marketer in the country. The company is ranked higher in regional sales at fifth position ahead of OiLibya, Nock and Petro.

Hashi is ranked sixth in terms of retail outlets market share behind Nock, OiLibya, KenolKobil, Total and Vivo. Lake Oil enters a familiar regulatory and competitive market in Kenya where the control of fuel prices and margins is similar to that in Tanzania.

Petroleum prices in Kenya are set by the Energy Regulatory Commission (ERC) while the regulator in Tanzania in the Energy and Water Utilities Regulatory Authority, with firms operating in both countries relying on higher volumes to grow profits.

The sale of fuel stations will leave Hashi with bulk petroleum distribution business in the local market including sale of fuel to airlines. Hashi also has a presence in logistics, solar products distribution and mining. The deal marks increased expansion by Lake Oil which was founded by Ally Edha Awadh, 37, in 2006.

Hashi's exit from the petroleum retail business comes after the company signed a Sh14 billion deal with Dubai's SS Lootah to venture into the supply of food to military personnel and non-governmental organisations in DRC.

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