The International Finance Corporation (IFC) is set to lend $14.2 million (Sh1.5 billion) to Lexo Energy Mauritius to expand its oil marketing business in Kenya and Tanzania.
Lexo, founded in 2017, has acquired 31 and six retail fuel stations in Kenya and Tanzania respectively.
Its market share of Kenya’s petroleum sales stands at about 0.9 percent, according to data from the Petroleum Institute of East Africa (PIEA).
“IFC is considering a loan of S$14.2 million (Sh1.5 billion) to finance the expansion of the network of fuel stations in Kenya and Tanzania,” the global financier says in its investment disclosures.
“This expansion will consist of acquiring other fuel stations mainly through the lease model but will also include the construction of at least one new station per country per year.”
Lexo’s core business is distribution of diesel and petrol through its network of retail fuel stations together with a variety of related products (LPG bottles and lubricants) and services (convenience store, car wash and fast-food services).
IFC added that Lexo will also start gradual installation of electric vehicle charging areas at its stations, starting with two pilot stations in the first 12 months.
The company aims to grow into a network of 200 fuel stations in seven years, with an annual growth of 10 to 12 stations per country.
Lexo is expanding into a price-controlled market dominated by Total Kenya, Vivo Energy Kenya (the Shell licensee) and Rubis Energy Kenya.
Oil marketers currently enjoy margins per litre of Sh7.95 for super petrol, Sh10.08 for diesel and Sh8.89 for kerosene, according to PIEA.
The capped petroleum prices, which are reviewed monthly, means that players with higher volume sales and lower operating costs are in a better position to grow their earnings.
Lexo is also preparing for the transition from internal combustion engines to electric-powered vehicles.
Unlock a world of exclusive content today!Unlock a world of exclusive content today!
