Kenya’s Petrol Retail Market Contracted First Half of Year

 The Petroleum Institute of East Africa (PIEA) said consumption of petroleum products in the first six months of the year dropped to 1,774,431 tonnes from the 1,803,900 tonnes used over the same period of 2007.

It is the latest confirmation that many consumers are changing their driving habits. The decline in consumption is particularly significant as motor vehicle registration for new vehicles are rising steady.
Kenya National Bureau of Statistics (KNBS) data indicates that motor vehicle registrations grew by 67 per cent to 9,539 in the first four months of the year compared 5,713 vehicles registered during the same period last year.

PIEA said high pricing of petroleum has forced many motorists to abandon private cars in favour of public transport to manage costs.  Mr George Wachira, the managing director of PIEA, said most motorists have resorted to using private cars on Fridays and weekends to cut down on fuel expenditure.

Some oil companies also  point to the January2008  post-election turmoil that blockaded large parts of the country is partly to blame for the dip in sales. “Jet A1 whose sales dropped by 16 per cent was particularly affected by the January turmoil when most international airlines stopped coming to Kenya and the domestic aviation market came to a near standstill,” said Mr Mwaura Ngaari, the Kenya Shell external affairs manager.

Mr Wachira PIEA said stiff competition had made it difficult for marketers to rev up pricing for fear of losing market share. He said that besides pricing, the petroleum industry was facing increased cost of working capital that has risen significantly due to high unit cost of stocks.

Kenol/Kobil maintains its leadership with 23.26 per cent market share in the first half of the year followed by Kenya Shell with a 21.31 per cent share of the market. Total is third with a 20.07 per cent share of the market, while Chevron, which trades as Caltex’s market share fell to 12.10 per cent from 15.26 per cent during the same period last year. Tamoil formerly trading as Mobil grew its market share to 7.88 per cent, Kenol controlled 3.39 per cent of the market, while government-owned National Oil Corporation of Kenya (NOCK) had a 3.65 per cent market share.  Gapco Kenya also won a large market share of 2.62 per cent up from 1.85 per cent during the same period last year.

Mr Wachira said prospects for the second half of the year will depend on how the economy absorbs the impact of oil prices and inflation pressures. Currently, Kenya consumes more than 3.2 million tonnes of petroleum products each year, with more than half of these volumes processed at the Kenya’s sole refinery.

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