Galana beats giants in fuel imports

An indigenous oil dealer has edged out large and multinational competitors in the multi-billion shilling centralised fuel import tenders.

Data from the Ministry of Energy indicates that Galana Oil Kenya Limited secured nine of the 14 tenders for fuel consumed in July and August.

Galana’s imports of 765 million litres of refined petroleum products under the open tender system (OTS) accounted for 73.5 per cent of the 1.04 billion litres that Kenya will have consumed in July and August.

Under the OTS, a firm that submits the lowest bid wins the tender to import petrol, diesel and jet fuel on behalf of the industry.

“It’s rare for a single marketer to ship in more than 70 per cent of the industry requirement, especially an indigenous player,” said a source at the Energy ministry.

Galana, which was co-founded in 1993 by the late billionaire James Gachui, is among indigenous firms that have turned the tables on their large rivals in recent years, notably multinationals like Total, Vivo and LibyaOil. Data from the Petroleum Institute of East Africa (PIEA) shows that five big oil marketers: Total, KenolKobil, Vivo Energy, Gulf Energy and LibyaOil had retail market share of 54.7 per cent in December from 66.9 per cent in June 2013. In the lucrative OTS tender business, Galana is gaining market share in a sector previously dominated by Indian billionaire Mukesh Ambani through his local affiliate Gapco.

“This is not just success for Galana Oil but demonstrates local companies’ capability to compete in fields previously perceived to be a reserve of multinationals,” Galana said in an e-mail response to the Business Daily’s inquiry.

Galana Oil runs the Delta brand of retail stations and the Delgas brand of liquefied petroleum gas.

Following closure of the Changamwe-based oil refinery, Kenya resorted to importing refined diesel, petrol and jet fuel.

This is done through the OTS that is coordinated by the Ministry of Energy and Petroleum.