Indian petroleum firm in Kenya entry plans ahead of Modi visit

India’s state-controlled Bharat Petroleum Corporation Ltd is seeking entry into the Kenyan market through distributorship deals ahead of Prime Minister Narendra Modi’s visit to Nairobi.

Bharat Petroleum – owned 54.93 per cent by the Indian government - is scouting for local distributors for its “Mak” range of lubricants targeting diesel and petrol engines, gear oils, aviation, transmission oils, specialty oils and greases.

The petroleum conglomerate listed on both the Bombay Stock Exchange and National Stock Exchange of India owns four refineries, more than 12,000 fuel retail outlets in India, oil exploration blocks, lubricant plant and cooking gas bottling plants.

“Bharat Petroleum invites applications from reputed business firms having experience in the field of sales and distribution of automotive/fast moving consumer goods/industrial products/and having robust financial background,” the firm said in a notice appearing in the local dailies.

The call closes on July 25.

Interested firms will have to pay a $200 (Sh20,000) non-refundable application fee to Bharat Petroleum via wire transfer.

Premier Modi, accompanied by a delegation of Indian investors, is expected in Nairobi on Sunday for a two-day official visit where he will explore trade deals with President Uhuru Kenyatta.

Bharat Petroleum recorded net sales of 189,098.10 crores (Sh2.8 trillion) and saw net profit soar to 46 per cent to 7,431.88 crores (Sh111.5 billion) in the fiscal year ended March 2016, according to the oil firm’s financial statements.

Bharat Petroleum’s impending entry into Kenya’s lucrative lubricants market further deepens the oil giant’s presence in the Kenyan market.

Unlike motor petrol, the price of lubricants – a byproduct of oil - is not controlled by the Energy Regulatory Commission (ERC) and analysts reckon that the oil and greases offer high profit margins.

READ: KenolKobil to build Sh1.4bn lubricant plant in Mombasa

Increased demand for efficiency in industries and the exponential growth of auto industry has increased the demand for lubricants in Kenya and whetted the appetite for makers of the byproduct, said Moses Macharia of SepYana Oil East Africa, which operates a lube oil blending plant in Nairobi.

“Over the years, the lubricant market has exhibited a lot of potential and is growing,” said Mr Macharia.

Bharat Petroleum in September 2015 disclosed that it was in talks with Tullow Oil to acquire a 10 per cent stake in exploration blocks 10BB and 13T where the Irish explorer has discovered over 600 million barrels of crude.

The Mumbai-based in July 2008 signed a $15 million equal joint venture deal with Kenya Pipeline Company to set up a liquefied petroleum gas plant in Nairobi.

Bharat Petroleum was among the firms which bid to acquire the Kenya Petroleum Refinery in Changamwe, then Energy minister Kiraitu Murungi told Parliament on July 16, 2008.

India’s Essar won the race to acquire the refinery but was forced to acrimoniously exit the venture in 2014 arguing it was no longer feasible to continue investing in the facility given the obsolete technology at the plant and Kenya’s inhibitive energy regulatory environment.