Can the new Nairobi International Finance Centre (NIFC) compete with Johannesburg and Dubai to help finance trade and industry in East Africa ... and beyond? Acting CEO Oscar Njuguna believes that there is plenty of room for everyone.
A company best known locally for an environmental dumping scandal in 2006 is now the owner of 37 formerly state-owned petrol stations through a deal that involves the nephew of President Alassane Dramane Ouattara. Activists denounced the February 2018 deal because state-owned oil company Petroci sold the petrol stations to Puma Energy Côte d’Ivoire, which is led by Ouattara’s relative Ahmadou Touré and owned by Netherlands-based Trafigura. Commodities trader Trafigura chartered a ship in 2006 that offloaded toxic waste in Abidjan, killing more than a dozen and injuring tens of thousands of people.
The opposition has criticised Ouattara’s government for its poor handling of state contracting. Competitive bidding rounds normally help governments to get better deals, but the Puma Energy agreement – like many others in Côte d’Ivoire – was conducted through an ad-hoc negotiation.
The deal to sell service stations is part of Petroci’s restructuring programme. The government launched those efforts in 2015 after the company lost 39bn CFA francs ($73.5m), due in part to the drop in the oil price. President Ouattara’s government recently authorised Petroci to restart stalled negotiations with the Touré-led Puma Energy Côte d’Ivoire. Petroci’s petrol stations had an annual turnover of 19bn CFA francs and controlled just 5% of the market at the end of 2017. The market leaders are France’s Total (35%), Amsterdam-based Vivo Energy (29%) and Oil Libya (13%).
The deal between Petroci and Puma Energy includes the creation of a joint venture called Puma Energy Petroleum Côte d’Ivoire, which is 20% owned by the Ivorian parastatal. The government has not revealed any details about the financing of the Puma Energy deal, which experts estimate to have a value of about 20bn CFA francs. In a similar deal in August 2015, Petroci sold off its petroleum logistic base to the Franco-Belgian company SEA-Invest and created the joint venture Petro-SEA-Logistics.
The restructuring plan launched by Petroci boss Ibrahima Diaby two years ago seeks to focus the company on oil and gas exploration and production. He inherited several problems. In 2013, former director general and Petroci president Daniel Gnangni commissioned the analysts at 2AC to audit the state-owned firm. The study revealed huge debts (estimated at the time at 15bn CFA francs), vast mismanagement, costly and ill-advised deals – like the purchase of Chevron’s network of petrol stations for 32bn CFA francs in 2008 – and major cost overruns. One example of wasteful spending was the construction of the oil and gas pipeline linking Abidjan to Yamoussoukro. It was designed to reduce traffic on the highways linking the economic and political capitals, but due to technical problems it was not able to reach its optimal capacity for several years. It also cost 160bn CFA francs rather than the initially predicted 121bn.
The government named Diaby as the company’s new director in December 2015 to help turn things around. The industry veteran worked at Petroci from 1984 to 1989 before being named adviser to then oil and energy minister Adama Toungara. The former director of hydrocarbons at the oil and gas ministry also was part of the Ivorian government’s team who unsuccessfully challenged the border with Ghana at the International Tribunal for the Law of the Sea last year.
Diaby’s efforts are paying off. In 2016, the state-owned firm reported a profit of 5bn CFA francs. But his leadership has not been without its problems. In order to streamline Petroci’s operations he sacked some 40 members of staff, including some senior executives, in January 2016. That led to a strike and difficult negotiations about severance packages. Similar strikes about the restructuring plan took place in January and July of last year.
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