Oil marketer OLA Energy Kenya (formerly OiLibya) is calling on the government to lower the cost of doing lubricant business in Kenya.
OLA Energy which runs an ISO Certified Lubricant blending plant in Mombasa says that raw materials for the manufacturing of lubricants, base oils and additives are charged an import duty of 10% while in other African markets, they are duty free. The only levies charged are on the finished product when sold in local markets or exported.
According to OLA Energy, Global Chief Executive Officer, Mazin Binramadan: “It has been very difficult and expensive to export lubricants to other countries like Ethiopia, Congo, Tanzania, Malawi, Zambia and Zimbabwe due to stiff competition from other countries namely Egypt, India, United Arab Emirates and South Africa who benefit from duty free manufacturing and other subsides.
“If base oils and additives are made duty free, this will enable Kenya to become more competitive in domestic markets and subsequently reduce the incentive for smuggling products into the country. Ethiopia for example, despite close proximity to Kenya imports these items from Morocco due to our high costs,” noted Mr. Binramadan.
“The current capacity utilization of our blending plant is about 60 % with a day shift. With additional business, this could potentially go up to 90% -95% with up to 3 shifts. This translates to more revenue for third party providers in the transport sector from an average of exporting 5 TEUs monthly to possibly 15 / 20 TEUs. This also leads to more job creation and economic empowerment for Kenyans,” he added.
On her part, OLA Energy Kenya General Manager, Millicent Onyonyi noted: “While we appreciate the Government’s effort in streamlining the energy sector through policy reforms, we are calling upon it to partner with the industry to eliminate bottlenecks affecting the lubricants’ segment with a view of making our products more competitive in the region and globally.”
“A vibrant lubricant industry means more job creation not only in the lubricant manufacturing industry but also in package manufacturing. Removal of duty on base oils and additives will help other sectors of the economy as lubricants are intermediate products in transportation, construction and manufacturing industries,” added Mrs. Onyonyi. OLA Energy is currently undertaking a change of its retail visual identity across the country. The process which kicked off last year involves changing brand livery from Oil Libya to OLA energy across its retail outlets in Kenya and Africa.