Rubis to run National Oil service stations for 8 years

Rubis Energy Kenya Plc is set to take over the management of fuel service stations owned by the National Oil Corporation for a period of 8 years.

The two companies have applied to the Competition Authority of Kenya (CAK) to be exempted from certain sections of the Competition Act to enable them execute the deal.

The non-equity strategic partnership agreement will see Rubis inject Ksh6 billion into National Oil which will be invested to revamp the government-owned company’s operations.

In turn, Rubis will take 30% of the profits generated by National Oil during the 8-year period while National Oil will retain 70% of the profits.

CAK Director-General David Kemei published the proposed agreement between Rub and National Oil in a gazette notice on Friday, inviting comments from the public on the proposed deal that is awaiting approval from the Attorney-General.

“As a non-equity strategic partner, Rubis will avail financing to NOC for modernization and expansion of NOC’s downstream infrastructure, deploy robust ERP system for effective controls and provide capacity building and management support,” says the proposed agreement.

If the deal goes through, the two companies will deploy a common fuel card, undertake joint marketing of the fuel card and also do joint reconciliation of transactions.

Rubis will deploy the Enterprise Resource Planning (ERP) system, support National Oil to manage the downstream business through the Joint Implementation Committee (JIC).

“Clauses 13.5.3 and 13.6 of the agreement provide that NOC shall use the Rubis procured certified partner to manage the ERP system and that Rubis shall have access rights to the system,”  says the proposed agreement.

It also details that Rubis and National Oil can brand their fleets of transportation trucks with the logos and trademarks of both companies.

This comes more than a year after the Cabinet in August 2023 approved the restructuring of National Oil as part of renewed efforts to retrun the struggling parastatal to profitability.

National Oil’s liabilities hit Ksh11.45 billion against assets of Ksh2.34 billion in the year to June 2023, a time when the company posted a loss before tax of Ksh2.34 billion.

At its peak, National Oil had a footprint of 110 service stations but has quickly lost market share to efficient private firms that currently dominate the oil marketing business in Kenya.

Vivo Energy is the leading oil marketing company in Kenya and commanded a market share of 22.24% as at June 2024, according to data from the Energy and Petroleum Regulatory Authority (EPRA).

It was followed by Rubis which had a market share of 15.56% while TotalEnergies had a market share of 15.06%.

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