In what is expected to diminish the influence of foreign energy companies on oil price fixing in Kenya, Engen, an African petroleum group with operations in 19 countries, has signed a strategic partnership with the Kenya Independent Petroleum Dealers Association (KIPEDA).
Under the deal, Engen is expected to supply (as the sole supplier of the group) adequate fuel and lubricants at fair prices and technical support on Petrol Service Stations operations, to independent dealers that have no links to multinational oil majors.
According to Engineer Kariuki, the Chairman of KIPEDA, unregulated wholesale petroleum prices in Kenya made it possible for oil majors to arbitrarily fix out-of-depot prices to dealers; a scourge that began around 2008. Dealers also reported unfair and discriminatory trade practices at depots, as well as erratic supply.
“But by 2008 tremendous challenges arose, threatening the very existence of indigenous Kenyan petroleum enterprises, Kariuki said at the signing.”
KIPEDA went into strategic partnership with Engen, which the group felt 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.
At the agreement signing ceremony attended by the Kenyan Ministries of Cooperatives and Energy, Powell Maimba, Engen Kenya MD said the deal “assures Kenyan independents and indigenous businesses of efficient and easy access to quality petroleum products, at a fair and competitive price.”
“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,” Kariuki said.
The development is expected to inject new life into the Kenyan retail fuel industry which hitherto, had been dominated by foreign operators.
The conclusion of the agreement makes Engen the largest oil retailer in East Africa’s biggest economy, with the addition of its new exclusive supply access to more than 200 service stations.
“It is a win-win for all concerned,” Maimba said.
KIPEDA was formed in the early 1990s as a platform for indigenous petroleum dealers, after the deregulation of Kenya’s petroleum industry.
During the first decade KIPEDA members went from strength to strength without much involvement from the association, until the crushing competition from foreign operators.