Total acquires major stake in Gapco
A fuel station operated by Total. FILE PHOTO
Kampala- The dominance of the two market leaders in the retailing of fuel is set to be further emphasised with the acquisition of Gapco by Total.
In order to strengthen its presence in the African market, last week Total agreed to buy the 76 per cent stake owned by Reliance Industries in Gapco’s Uganda, Kenya and Tanzania operations for a fee estimated at $400m (Shs1.3 trillion).
According to Reuters, the minority shareholders have also agreed to sell the remaining 24 per cent to Total.
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 Uganda is pleased to be part of Total’s expansion drive in East Africa. The addition of Gapco’s assets to our retail network will enable us to serve more customers with our quality products and within convenient locations. As we celebrate our 60th year in the country, safety, operational excellence and customer focus will remain our priorities in the years to come,’’ Florentin de Loppinot managing director, Total Uganda, said in a statement released on Monday.
Total and Shell control nearly 50 per cent of the entire Ugandan retail market share in terms of distribution. It is expected that Total will become more dominant with the Gapco acquisition. The two are usually neck to neck in terms of market share.
In a meeting with Uganda Revenue Authority officials last week, Total revealed that the acquisition of Gapco also gives them access to increased storage capacity. Gapco operates two fuel depots in Uganda.
Gapco made an entry in the Ugandan market in 1994 when it acquired the assets of Esso. Notably, Gapco has also been importing fuel through two terminals: one in Dar es Salaam – Tanzania, and Mombasa - Kenya.
Total will acquire both fuel terminals, which in part, ensures steady fuel supplies.
Reacting to the acquisition and its potential to tilt the market towards Total, Mr Hans Paulsen, the managing director Vivo Energy, noted that they will not be playing second fiddle.
“Competition is healthy for the industry and we welcome it. Our biggest competitor to date has more sites than Shell. We currently have 123 Shell service stations. However, we are market leaders in the overall industry and in the retail segment specifically. We definitely aim to maintain this position by continuing to focus on the customer and ensuring that we not only meet but exceed their expectations,” Mr Paulsen said.
