French oil major Rubis took a forex loss of €19 million (Sh3.2 billion) in the Kenyan market last year amid a sharply depreciating shilling that saw revenues contract by Sh19 billion.
The oil firm says in a trading update that Kenya and Nigeria were its two markets most hit by the difficulties in accessing dollars, hitches that forced dealers to take currency swaps as a hedge against forex shortages and a deteriorating exchange rate.
The Rubis Kenyan operation last year posted revenues of €886 million representing a drop of 11 percent as reported in euros —the financial reporting currency of the multinational— from €996 million in 2022 amid a drop in demand for fuel.
The shilling remained on a free-fall last year against major trading currencies, adding to the challenges of accessing the US dollar which Rubis and other oil firms use to pay for fuel imports.
Consumption of super petrol dropped to 1.01 billion litres between January and June last year from 1.074 billion litres in 2022 while that of diesel fell four percent to 1.31 billion litres compared to 1.36 billion in the same period.
“Foreign exchange losses arose mainly from operations based in Kenya and Nigeria,” the French oil major says in the disclosures.
“Rubis purchases petroleum products in US dollars; the Group’s only potential exposure is therefore to that currency.” Oil marketers were forced to enter into foreign exchange borrowings and swaps last year in a bid to access dollars to fund working capital requirements.
The government entered a fuel import deal with three Gulf majors last year to supply fuel on a 180-day credit period, in a bid to ease the foreign exchange pain on oil marketers, a decision that Rubis notes has been critical in easing the forex exchange pressure.
But Rubis did not reveal the volumes of fuel that it sold in the Kenyan market last year, at a time when record-high prices suppressed demand, hitting the oil marketers.
Pump prices crossed the Sh200 mark last year —the first time in Kenya’s history— forcing consumers to cut consumption amid a high cost of living.
Last year’s sales bucked a trend where Rubis, the third biggest oil marketer in Kenya has over the past three years been posting significant growth in revenues.
“As of 31 December 2023, revenue generated in Kenya amounted to €886 million,” Rubis said in a trading note on its performance in all its markets last year.
Rubis has over the years been locked in a race against Vivo Energy and TotalEnergies Marketing Kenya for market share growth.
Rubis had a market share of 10.93 percent behind TotalEnergies Marketing Kenya at 16.39 percent and Vivo Energy at 22.79 percent as at June 2023. The fight between the three multinationals has been marked by aggressive expansion in Nairobi, major cities and the highways.
By JOHN MUTUA