Sh890bn deal to make Total EAC market controller

Dar es Salaam. French oil major Total Outre Mer is now the dominant player in East Africa’s oil industry, thanks to its closing of a $400 million (about Sh890 billion) acquisition deal of Gulf African Petroleum Corporation (Gapco).

The company said in a statement yesterday that the deal – which started in May 2016 – was officially closed on Tuesday this week.

“Total’s May 2016 acquisition of Gulf Africa Petroleum Corporation’s (Gapco) assets in Kenya, Uganda and Tanzania closed yesterday, March 28…..The principal assets being acquired are two logistics terminals, in Mombasa, Kenya and Dar es Salaam, Tanzania, as well as a retail network of more than a hundred service stations,” the statement reads.

It states that the in combination with its existing operations in Kenya, Uganda and Tanzania, the acquired assets will strengthen Total’s logistics in the region and significantly accelerate the growth of its retail network, especially in Tanzania.

According to the statement, the priority now is to begin merging Gapco’s assets and operations with Total’s in the three countries and to foster business and human resource synergies. In Tanzania, Total is active across the marketing chain, with a retail network of 32 service stations and lubricant, aviation fuel and general retail businesses. It has an estimated market share of 10 per cent. On the other hand, Gapco is one of the leading oil retailers in the country, with several retail outlets scattered across the country.

In Uganda, Total has been operating 125 fuel stations. With the acquisition of Gapco, they will increase to 162 stations, further surpassing Vivo Energy (Shell Licensee) which has 123 fuel stations. Currently, Gapco operates 37 service stations in Uganda.

Total and Shell control nearly 50 per cent of the entire Ugandan retail market share in terms of distribution and thus turning Total into a more dominant player with the Gapco acquisition.

The Paris-headquartered firm, with well-established links through Total Kenya, Total Uganda and Total Tanzania, will now enjoy the full economies of scale in both downstream and upstream sectors, riding on the massive assets of Gapco.

Total exploration and production unit in Uganda has also owns a 54.9 per cent stake in Tullow Oil. As a major shareholder, the firm is promising to steer Uganda into being an oil producer, with first exploration expected in three years’ time. This puts Total in prime position to benefit from the huge explorations.

This also comes at a time when Tanzania is planning to complete construction of a $3.5 billion crude oil pipeline from Uganda in 2020.