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French oil major Rubis has singled out Kenya as one of the African markets where it expects a ‘bleak’ second half of the year, highlighting the myriad of issues facing the petroleum market and other businesses in Kenya.
Rubis said the dipping economic outlook in Kenya is likely to impact its business –reversing gains in a market where it posted a marginal growth in revenues for the first half the year even as its main rivals faltered. Rubis was the only oil major that posted revenue growth in the Kenyan market in the first half of this year.
“After a very solid performance in the first half of 2024, the Caribbean region will continue to deliver strong growth. Europe’s positive operating momentum will also continue. The economic situation in Africa remains unstable, in Kenya in particular,” Rubis said in a market update.
The dim outlook by Rubis comes just months after the firm defied the impact of floods and protests that hit demand for fuel and grew revenues to Sh67.38 billion from Sh68.4 billion made in the first half of last year.
Kenya’s economy grew at its slowest pace in four years during the second quarter of this year, as key sectors including agriculture, electricity and water supply, transport and storage, accommodation and food services, finance, and insurance all marked a slowdown in growth.
The country registered a slower 4.6 percent GDP growth in the second quarter, compared to 5.6 percent at the same time last year. The construction, mining and quarrying sectors remarkably contracted, resulting in slowest second-quarter growth since the pandemic.
The Central Bank of Kenya (CBK) has now cut its economic growth forecast to 5.1 percent, down from 5.4 percent, citing slower growth in the second quarter on diverse factors including suppressed credit flows.
Besides a shaky economy, the volatility of the shilling against major global currencies, a dip in fuel consumption and delayed compensation of oil marketers under the fuel stabilisation scheme has been a concern for oil firms in the country.
Rubis’ red flag comes at a time when fuel consumption is set to remain on the drop after the road maintenance levy was hiked to Sh25 per litre of diesel and super.
Between January and June this year, consumption of petrol in Kenya fell 2.9 percent to 986.2 million litres from 1.01 billion litres in the same period of last year, while that of diesel dropped 2.5 percent to 1.27 billion litres from 1.31 billion litres.
Oil firms are also grappling with the adverse effects of the re-introduction of the fuel subsidy scheme, where the Treasury already owes oil firms at least Sh3 billion.
Rubis is holding €33 million (Sh4.65 billion at the current exchange rate) in treasury bills after the government converted billions of shillings due to oil marketers as compensation for subsidising pump prices
Oil marketers are also jittery about the prospects of the shilling against the major global currencies like the dollar and euro.
Additionally, Kenya still has lingering political uncertainty since June when deadly protests over high tax measures forced President William Ruto shelve the controversial Finance Bill 2024.
The protests dented fuel consumption. The ongoing ouster bid of Deputy President Rigathi Gachagua has rekindled political tensions.
Rubis holds a market share of 14.05 percent behind TotalEnergies at 14.88 percent, while Vivo Energy dominates with a share of 22.07 percent.
Rubis’ main rival, Vivo Energy reported a two percent dip in revenues to Sh99.16 billion ($769 million) in the first half of this year, from Sh101.22 billion ($785 million) in the same period last year.
Vivo is currently battling out with TotalEnergies in the race to be the second most dominant oil marketer in Kenya, behind Rubis Energy.
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