How Kenyan politicians, tycoons are minting billions from oil import deals

Oil tycoons

Under Open Tender System, oil all dealers purchase fuel products from the winning bidder and retail it under Epra-regulated prices.

Photo credit: Pool

There is no yardstick that one could use to declare the Delta petrol stations as king of the retail section of Kenya’s petroleum industry.

Last year, the firm was not among the top 10 petroleum dealers in the retail sector. And Delta does not break its back attracting clients compared with multinationals like Rubis, OLA, Total and Shell.

But Delta is by no means a small entity.

The chain of petrol stations is owned by Galana Oil.

Galana Oil has since 2004 been one of the most consistent winners of the Open Tender System (OTS), a procurement process in which individual companies bid to supply all the fuel consumed locally for a one-month period.

Under the OTS, all petroleum dealers purchase fuel products from the winning bidder and then retail it to the general public under prices regulated by the Energy and Petroleum Regulatory Authority (Epra).

The tendering is usually done for a three-month cycle. Winners for the July-September cycle were declared in June.

One of the requirements to bid for the OTS is having a retail network locally, which means Delta is one of the crucial parts in the Galana Oil machine.

Next month, Galana Oil will import 102,072 metric tonnes of petrol for consumption in September. It will also import 16,052 metric tonnes of kerosene to be consumed in September.

At the height of a biting fuel shortage in Kenya between April and May, Galana Oil imported 241,868 metric tonnes of super petrol following a previous OTS winning bid.

All other petroleum dealers will buy the two products from Galana Oil.

One thing is always guaranteed with the bulk imports – all the fuel will be purchased, meaning huge profits will be raked in on account of the volumes.

Galana Oil

Records at the Business Registration Service show that Galana Oil was registered on June 7, 2000 and is owned by three firms.

Sai Ram Investment Company (1,576 shares), Romichi Company (1,576 shares) and Tapiola Limited (1,598 shares) are behind the oil import juggernaut.

But the ownership details of Sai Ram Investment Company and Tapiola Limited are not available at the registry’s online portal.

The two companies are listed as unverified on the portal, suggesting that they have not complied with the requirements to furnish details such as shareholders and directors to the Registrar of Companies.

Businessman Joseph Gitau Mburu is the majority shareholder at Romichi, with 490 shares. Rose Wamuyu Gitau, Wanjiku Gitau and Wairimu Gitau each own 170 shares.

Other Galana Oil directors – George Ngige Kahira, Jonathan Ngige Kahira, Mary Waithera Kabiru, Isaac Mukui Nduru and Sheetal Khanna – have a stake in the firm and are likely the faces behind the shareholder companies.

The company registry’s records show that Galana Oil took a $13.84 million (Sh1.6 billion) loan in December 2021, likely to finance oil imports.

Galana Oil, Texas Energy and Riva Petroleum Dealers are the only oil import heavyweights whose ownership is 100 per cent local.

With the three, both the trading company and shareholders are Kenyan.

Texas Energy will ship in 85,124 metric tonnes of petrol in August for consumption in September.

The firm was incorporated on November 20, 2014 and has over eight years grown into one of the most consistent OTS winners.

Texas Energy CEO Abdi Hakim Ebrahim is the majority shareholder, with 22,092 shares.

Bomachoge Borabu MP hopeful Nolfasson Obadiah Barongo has 12,098 shares. Nasro Dahir Ahmed has 9,468 shares, while his brother Johar Dahir Ahmed holds 8,942 shares.

Texas Energy has since its inception brought in 1.34 million metric tonnes of petroleum. The imports were delivered in 18 ships in various months over the years.

Much like most OTS participants, Texas Energy borrows to finance the imports.

In December 2021 it borrowed $70 million (Sh8.2 billion) to finance its operations.

OTS winners

The only other 100 per cent locally registered and owned firm at the high table of regular OTS winners, Riva Petroleum Dealers, was registered on June 21, 1996.

Riva did not, however, bid for any supply deal in the July-September cycle.

The company is owned by the family of its founder, Peter Njeru Njagi.

Mr Njagi and his wife Dorcas Waguthi own 80,000 shares each. Their children Wangui and Wawira own 20,000 shares each.

The Njagi family’s firm is separate from Riva Oils, the firm owned by politician Kazungu Kambi.

In April, E3 Energy Limited won a contract to import 102,254 metric tonnes of kerosene.

The firm attempted to supply kerosene for the July-September cycle, but was beaten by Oryx Energy, which presented a lower bid.

E3 Energy was incorporated on April 19, 2004. The firm was originally owned by the family of tycoon Maganlal Motichand Chandaria, but they have since ceded majority ownership to a Dubai-registered firm by the same name.

In 2019, the Chandaria family sold 85 per cent of the company to E3 Energy DMCC.

E3 Energy Dubai now owns 1.1 million shares in the Kenya-registered E3 Energy.

While the Chandaria family sold most of its shares that were held through Global Petroleum Products Kenya Limited, some of its members have maintained a minority stake.

Hetul and Bhavnish Chandaria each own 50 shares in the energy firm, hence they still reap some profit from the lucrative oil import business.

Records at the company registry show that E3 Energy borrowed $40 million (Sh4.3 billion) to finance a shipment of petroleum in November 2021.

Another big player with mixed ownership, Hass Petroleum, has not had a big year in the import business. It did not bag any deal in the April-June cycle, and failed to bid for the import tenders in the July-September cycle.

 The firm was founded by brothers the late Abdirizak Ali Hassan and Abdinasir Ali Hassan on January 21, 2000.

In its prime, Hass was one of the most consistent OTS winners, had a contract to supply diesel worth Sh13 billion to the collapsed Rift Valley Railways, and was behind a plan to build Africa’s tallest tower in Nairobi’s Upper Hill area. Its fortunes have changed as it struggles to keep up with competitors’ aggressive branch network expansion, it does not win OTS deals as regularly anymore, and construction of the Upper Hill tower stalled following the exit of key financiers and protracted land battles in court.

Petroleum market share

At the time the Oman Trading International (OTI) bought a 40 per cent stake in Hass Petroleum in 2017, the firm controlled 1.9 per cent of the petroleum market share.

 But even with the diminished fortunes, Hass is still a big name, with investments worth billions across nine African countries where it exports petroleum products to. An increase in oil exports to countries within the East African region, Hass now controls 3.01 per cent of the petroleum industry market share.

 Despite having some local ownership, Hass Petroleum’s owners hold their stakes through a Dubai-registered firm. Hass Petroleum Tradin GR DMCC owns all 5,168,345 shares of Hass Petroleum Kenya Limited. The Dubai registration makes it difficult to know the exact stake each shareholder has. Hass Petroleum Kenya borrowed $28,900,000 (Sh3.4 billion) in January, some of which may have been to finance oil imports.

Much like Hass Petroleum, Hashi Energy also has local ownership through an overseas vehicle. Originally registered as Hashi Empex, the firm was incorporated on April 2, 1991.

Founder Ahmed Hashi Adan holds one share in the Kenyan company. His Mauritian holding company, Hashi Energy Holdings, owns 2,249,999 class A shares and 3,900,000 in the Kenyan firm.

Hashi has not participated in import cycles in 2022 based on the data from Epra seen by the Nation.

 But the firm has a branch presence in major towns in Kenya, and also exports oil worth billions to regional markets. In 2015 Hashi Energy bagged a contract worth billions to supply the United Nations with petroleum products in Congo.

Mombasa-based tycoon Alnoor Habib Jiwan uses a similar ownership structure at his Petro Oil Kenya Limited.

Petro Oil was incorporated on October 16, 2000. Mr Jiwan has since transferred his 900,000 shares to British Virgin Islands-registered Petro Group Limited.

His kin, Imran Alnoor Jiwan, owns 100,000 shares in the Kenyan firm.

Petro runs a wide retail branch network across East Africa, and states that retailing petroleum is still its core business.

While the Nation could not access the ownership records of another local oil importer, Fossil Fuel Products Limited, we have established that the firm is associated with the Petrocity chain of retail stations.

Petrocity is owned by another set of Mombasa-based tycoons – Aman Jafferali Kurji and Rishma Aman Kurji.

Fossil Fuel Products also opted not to bid for import deals in the July-September cycle.