Engen, the African petroleum group with operations in 19 countries in Sub Saharan Africa and the Indian Ocean Islands, has signed a strategic partnership with the Kenya Independent Petroleum Dealers Association, installing it as the sole supplier of petroleum products to KIPEDA’s dealer members.
Under the deal, Engen offers independent dealers that have no links to multinational oil majors the assurance of adequate fuel and lubricants supply at fair prices and technical support on how to operate a successful Petrol Service Stations.
The development will inject new life into the Kenyan retail fuel industry and offers significant benefit to both parties, say the signatories.
Rise of the independents
Formed in the early 1990s after the deregulation of the country’s petroleum industry, KIPEDA provides a platform for indigenous petroleum dealers.
Engineer Kariuki, the Chairman of KIPEDA, says that during the first decade KIPEDA members went from strength to strength without much involvement from the association. “But by 2008 tremendous challenges arose, threatening the very existence of indigenous Kenyan petroleum enterprises.”
He explains that unregulated wholesale petroleum prices made it possible for oil majors to arbitrarily fix out-of-depot prices to dealers. Dealers also reported unfair and discriminatory trade practices at depots, as well as erratic supply, and say retail prices, fixed by regulation, are uneconomically low.
The solution came in the form of a strategic partnership with Engen, which KIPEDA knew could help it leverage the strength of its members to their collective benefit. Independent indigenous Kenyan dealers currently number more than 500 sites currently – making up half of the Kenyan retail petroleum sector.
“The deal with Engen will help us overcome erratic fuel and lubricants supply, uneconomic price margins, lack of access to quality products and other constraints,” says Kariuki.
The parties praised the agreement at a signing ceremony attended by the Kenyan Ministries of Cooperatives and Energy. “It assures Kenyan independents and indigenous businesses of efficient and easy access to quality petroleum products, at a fair and competitive price,” says Powell Maimba, Engen Kenya Managing Director.
As for Engen, the company now enjoys exclusive supplier access to more than 200 service stations, giving it the largest retail footprint in one of Africa’s biggest economies.
“It is a win-win for all concerned,” Maimba says. “Wider access to fair and reliable supply of petroleum products will stimulate competition and choice in the Kenyan market - and allow local indigenous businesses to thrive. Engen is looking forward to participating in a vibrant industry that is equal and fair.”