kenyaTotal Kenya Limited

Company Profile and History

Total Kenya Limited is part of the TOTAL Group, the 4th largest Oil and Gas Company in the world operating in over 100 countries. The group is involved in all aspects of the oil industry from exploration and production to refining and marketing and it is also strong in the chemicals market.

The company currently trading under the name of Total Kenya Limited was first registered in Kenya on June 13, 1955 as OZO East Africa Petroleum Company Limited. Actual business operations began in 1959. The name was changed to Total Oil Products East Africa Limited on January 1, 1963. The first Initial Public Offering (IPO) was made in 1988 and Total Oil Products East Africa Limited became the first multinational oil company to be quoted on the Nairobi Stock Exchange. It remains the only one to this day.

The last change of name to Total Kenya Limited was registered on June 11, 1991. It was the first oil company in Kenya to be awarded the ISO 9002 certification for its service station network and for its customer order delivery process. The certification upgrade to ISO 9001:2000 was achieved in November, 2003.

Total Kenya recently acquired six Elf service stations bringing the number of service stations operated by Total to 104

In Country Location

Chai House, Koinange Street, Nairobi, Kenya; Tel: 020-550795/6/7 020-2550795

Services and Products

The range of products and services offered by the Company include: lubricants - Quartz (for petrol engines) and Rubia (for diesel engines) sold through the service station network. The company is also strong in the area of industrial lubricants and has established a laboratory for the testing of such lubricants. It is the only facility of its kind in East Africa.

In LPG, Total Kenya offers the widest range of products to the customer i.e. 50 kg, 22.5 kg, 13 kg, 6 kg Meko and 3 kg Baby Meko. The company also supplies bulk gas to institutional customers.

Total Kenya also has Auto Express/Pitstop service, the Bonjour/All Seasons shops (18 shops countrywide at the moment), the Firestone and Michelin Tyre centres, the Auto Clean/Car wash and restaurants. It is also active in aviation fuels and the supply of bitumen.

Number of Employees

263 employees

Financial Information

Total Kenya Limited: Unaudited Results for the 3 Months Ended 31 March 2009

Market Share

The company has become one of the country's major oil and gas marketing companies with over one hundred service stations and a market share of 19.6%.

Business Objective

“To be a leader in the quality of our products and services; to be a leader in profitability and returns to our stakeholders; to be the most responsible and preferred company in the region”

Business Model

“Total’s strategy, the implementation of which is based on a model for sustainable growth combining the acceptability of operations with a sustained, profitable investment program, aims at: expanding hydrocarbon exploration and production activities throughout the world, and strengthening its position as one of the global leaders in the natural gas and LNG markets; progressively expanding Total’s energy offerings and developing complementary next generation energy activities (solar, biomass, nuclear); adapting its refining system to market changes and consolidating its position in the marketing segment in Europe, while expanding its positions in the Mediterranean basin, Africa and Asia; developing its chemicals activities, particularly in Asia and the Middle East, while improving the competitiveness of its operations in mature areas; and pursuing research and development to develop “clean” sources of energy, contributing to the moderation of the demand for energy, and participating in the effort against climate change.”

Ownership of Business

Total Kenya Ltd is the local unit of Total SA. Total Outré Mer is the majority owners of Total Kenya.

Benefits Offered and Relations with Government

The Government deregulated the downstream petroleum market operations in 1994. These reforms included liberalization of distribution and pricing of petroleum products and partial liberalization of product supply. Some of the reforms included abolition of the white oil rule, abolition of National Oil Company of Kenya’s 30% crude oil supply quota, liberalization of transportation modes and attendant tariffs, legalization of minimum operational stocks and introduction of suspended duty on refined products imported directly into the country to cushion the refinery from competition from efficient refineries in the gulf region.

In Kenya the energy sector is governed by the Energy Act No. 12 of 2006. This legislation replaced the Petroleum Act and Electric Power Act which had been repealed. The Energy Act is a comprehensive piece of legislation that encompasses the petroleum and natural gas, electrical energy and renewable energy sectors.

In 2009 the ERC embarked on drafting regulations to control pump prices. The Energy Act requires all proposed regulations to be recommended by the ERC to the Minister for Energy after consultations with the public. Although the National Energy Policy of 2004 states clearly that government will let market forces determine prices, during the Parliamentary readings of the Energy Bill a last minute clause was inserted in section 102 giving the Minister for Energy power to make regulations determining the retail prices of petroleum and petroleum products. Accordingly the ERC in line with its function of protecting consumer and stakeholder interests has recommended regulations that will control pump prices The regulations propose a formula for pump prices which incorporates the crude or refined product prices, freight, local transportation costs, financing, insurance, the refinery processing fees, taxes and a profit margin.

The proposed pump price regulations have attracted resistance from oil marketers who would prefer to have the market forces and competition control pricing. The regulations have been viewed by economists as taking the country back to the pre-1994 days before the industry was liberalized. There is mention of a possible suit by wholesalers who claim that the Energy Act only empowers the Minister to determine retail prices and not wholesale prices as the regulations propose to do.

Product Development

Total Kenya is to pay Sh3.9 billion to its parent company for the acquisition of its subsidiary used for the purchase of Caltex (Chevron) Kenya and Uganda. The transaction is to be financed through the creation of 1223.5 million redeemable preference shares (RPS) to Total Outré Mer S.A. In acquiring Chevron Kenya and Uganda entities, Total Outré Mer S.A, established a new subsidiary Total Marketing Kenya for the deal. TKL has received all relevant approvals for the transaction, including the approval of the Capital Markets Authority for the issue of the shareholders circular.

After the buyout, Total Marketing Kenya will operate, the 165 Caltex-branded service stations, one terminal, seven fuel depots, six aviation facilities and one lubricants blending plant. A rebranding process of the former Caltex pump stations had also been rolled out in line with the acquisition.

Remark:

Chevron Africa Holdings Ltd agreed in November 2008 to sell 100 per cent of Caltex shares in Kenya and Uganda to Total Outré Mer, the majority owners of Total Kenya listed at the Nairobi Stock Exchange.