Swiss firms take over Shell in Sub-Saharan Africa

Monday, 21st February, 2011

SWISS joint-venture firms, the Vitol Group and Helios Investments, have taken over Royal Dutch Shell’s majority shareholding interest in sub-Saharan Africa, including Uganda.

The deal is worth $1b. Under, the agreement, Shell, the parent company of Shell Uganda, will retain equity in two new joint venture companies to ensure continued availability of its fuels and lubricants in 14 African countries under the Shell brand.

“This is a good deal for us and customers,” said Mark Williams, the Royal Dutch Shell downstream director.

“We will significantly reduce our expenditure, concentrate on our global downstream footprint and continue to provide the quality products that African customers have come to trust over many decades.”

Ian Taylor, the president of Vitol Group, said: “These two new ventures allow us to invest in Africa and its fast-growing economies and grow all the businesses under the umbrella of the Shell brand for the benefit of customers.”

Tope Lawani, the Helios Investment managing partner, said he was pleased with the “landmark” agreement.

“We believe that combining Vitol’s world-class supply expertise and Helios’ deep understanding of the African operating environment with Shell and a professional workforce will create significant growth opportunities for the business. We will ensure the continued supply of quality products and services for African consumers.”

One joint venture will own and operate Shell’s existing oil products, distribution and retailing businesses in 14 African countries, with the potential to add five more in future.

Vitol and Helios will hold 80% of the venture and Shell the remaining 20%.

A separate company, which will be 50% co-owned by Shell and 50% by Vitol and Helios, will operate Shell’s existing lubricants blending plants in seven countries. It will also manage macro-distributor relationships in these countries where the main venture operates.

The take-over by the Swiss firms ends the bidding rivalry among oil companies such as Oilibya, Morocco Oils, Tamoil and Engen Petroleum, which were contesting for the ownership of the lucrative oil business.

It also means that the Vitol Group and Helios will join Total as the other big global brand in the petroleum retail business.

Ivan Kyayonka, the Shell Uganda managing director, said the new change in shareholding would not affect it employees in the 14-countries. “Nothing is going to happen to our staff,” he said yesterday.

“The change is in the shareholding, profit and dividend distribution.”

Shell had positioned itself in the Ugandan market with earlier acquisitions of Agip and BP, but seems to be reeling from growing competition from local and Asian firms.

The sell of the African business comes barely seven month after Royal Dutch Shell sold similar operations in Greece at $300m.

The three firms will now concentrate on securing necessary regulatory approvals and integration planning, ahead of a phased completion of the proposed deal during 2011 and the first half of 2012.

By Ibrahim Kasita : The New Vision Newspaper