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[June 25, 2014]
KenolKobil loses market share to small dealers [Business Daily (Kenya)]
(Business Daily (Kenya) Via Acquire Media NewsEdge) KenolKobil has lost seven percentage points market share to rival oil marketers, ceding its position as Kenya's second biggest retailer of petroleum products to Vivo Energy.
New industry data for 2013 shows KenolKobil now controls 13.8 per cent market share, compared to the 20.8 per cent it commanded a year earlier.
The data released by industry lobby group, the Petroleum Institute of East Africa (PIEA), shows that Kenol now holds the third position, with Vivo rising to claim the second spot with a market share of 17.2 per cent last year from 17.1 per cent in 2012.
"We benefitted from higher sales in the corporate aviation and retail motoring sectors," said Polycarp Igathe, Vivo's chief executive.
Smaller oil marketers, including Oilibya, were the biggest beneficiaries of Kenol's reduced sales volumes as Total Kenya retained its market leadership with a 21.7 per cent share, up marginally from 21.4 per cent.
Besides increased sales, a larger market share gives a firm the right to a larger allotment of future petroleum products that are imported based on a company's current sales volumes.
New low Kenol's CEO David Ohana declined to comment on Kenol's changed fortunes. It marks a new low for Kenol which was in 2011 ranked as the country's largest oil marketer for the first time, beating Total by 1.7 percentage points.
Kenol pulled ahead riding on discount pricing, drawing in more motorists to its fuel stations. The oil marketer, however, suffered a lockout from the fuel supply chain last year that lasted weeks as well as its decision to exit certain "low-margin" businesses.
The government in June last year suspended Kenol from buying petroleum products either through the Open Tender System or through the Kenya Pipeline Refineries (KPRL) due to a Sh1.2 billion debt owed to Kenya Pipeline Company.
The oil firm was also accused of failing to lift 19,610 tonnes of fuel produced at the KPRL which has since ceased operations.
The sanction was lifted weeks later on July 22 last year after Kenol and KPC reached an out-of-court settlement over the dispute. The oil marketer's sales suffered in the interim period during which it struggled to source supplies from rival oil marketers to fulfill orders.
READ: Kenol back in the market after KPRL out-of-court deal Kenol said in a statement that it continues to restructure its sales mix by focusing on high margin sales and exiting low margin businesses.
It didn't give details on the low margin businesses it is curtailing but the retail segment enjoys less profitability compared to wholesale where sales are directed at large buyers such as smaller oil marketers and emergency power producers.
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