French oil major Rubis has flagged Kenya as one of its most challenging markets in Africa, largely citing a volatile shilling and delays in reviewing margins for oil marketers.
Rubis made the disclosures adding that it took a hit of €17 million (Sh2.28 billion) in forex losses in Kenya last year. The firm also said that delays in increasing margins for retail distribution of fuel hit its revenues.
“In Africa, the difficult operating conditions in Nigeria and Kenya, combined with high volatility in the foreign exchange rate in Kenya led to an increased pressure,” Rubis says in the disclosures.
Kenya and Nigeria were the two biggest contributors to the forex losses of €47m (Sh6.31 billion) that Rubis suffered in all its markets globally last year.
“The adjustment in the pricing formula for retail distribution in Kenya which was initially expected to take place in the second half of 2024 has not happened in 2024. This delay generates a gap between Rubis inflow and its costs, thereby degrading margins.”
The concerns raised by Rubis, however, come as the shilling recovered against major global currencies to end 2024 stronger compared to the woes of 2023 which stretched into the start of last year.
The Kenyan unit appreciated by a 17 percent against the US dollar in 2024—reversing sharp losses against the greenback earlier in the year. The shilling exchanged at 129.2 units to the dollar in December last year compared to 156.63 units at start of 2024.
The local currency closed last year at 134.47 units to the euro compared to 172.89 units in January 2024, highlighting the steep movement as the shilling ended a sharp depreciation that started in 2023 as the peak of the hitches in accessing dollars.
The product pricing formula concerns by Rubis also come at a time when the Energy and Petroleum Regulatory Authority (Epra) started a phased increment of the oil margins allocated to dealers last month in a bid to lift their fortunes.
In the current monthly prices that will lapse on April 14, oil margins were increased to Sh15.24 from Sh12.39 per litre of petrol, Sh15.16 from Sh12.36 per litre of diesel, and Sh15.09 from Sh12.36 for the same quantity of kerosene.
Rubis is the second biggest oil marketer in Kenya with a share of 15.96 percent as of December 2024, behind Vivo Energy—retailer of Shell branded products— at 21.34 percent.
Oil marketers had for the better part of 2022 and 2023 suffered significantly amid a fast-depreciating shilling against major global currencies and also hitches in getting dollars to pay for fuel imports.
Forex woes meant that the foreign oil firms needed more shillings when reporting their financial performance in either euros or dollars. This negated the impact of higher fuel sales.
Rubis says that its performance in Africa is highly pegged on the adjustment of the pricing formula for retail distribution in Kenya and political decisions taken in Nigeria about the construction of bitumen roads.
The French oil major had in 2023 suffered forex losses of €19 million (Sh3.28 billion based on prevailing exchange rates at the close of 2023).
