The Competition Authority of Kenya (CAK) has limited the strategic partnership between French oil marketer Rubis and the cash-strapped National Oil Corporation of Kenya (Nock) to five years in a bid to reduce risks that could arise over a long period.
Rubis and State-owned Nock applied to the CAK for approval of an eight-year non-equity strategic partnership, but the competition watchdog has only approved five years.
“The authority in September 2024 received an exemption application from Nock and Rubis outlining their desire to enter into a non-equity strategic partnership for eight (8) years,” said CAK.
“The Competition Authority of Kenya has granted an exemption to the National Oil Corporation Kenya Limited (Nock) and Rubis Energy Kenya Plc (Rubis) to enter into a non-equity strategic partnership for five (5) years.”
Sources privy to the matter say the shorter deal mitigates any issues that may arise between the two oil marketers without tying them into a longer commitment.
The deal, which faced several hurdles, including the government's delay in signing the agreement, will see Rubis inject Sh6 billion into Nock, with Sh3 billion to be used as working capital and the other half to revamp and expand Nock’s fuel stations countrywide.
According to CAK, the non-equity strategic partnership between the two oil dealers will not negatively affect the sector’s competitiveness, as it is not a merger or acquisition.
The deal will enable Rubis to finance Nock's downstream business to modernise and expand its retail outlets, resulting in increased sales and market share.
The two companies will collaborate in, among others, business growth, procurement, decision-making, marketing initiatives, fuel card systems, branding, and information rights.
In 2023, Nock opened a search for a non-equity investor in line with a cabinet directive to revive the loss-making state-owned oil company.
At its peak, Nock had a footprint of 110 service stations, including 13 stations acquired from BP in 2009 and 33 stations acquired from Somken 14 years ago.
But years of perennial struggles and losses hit Nock's competitiveness, cutting its market share to less than one as of the end of June last year.
