Vito Energy is taking over Petroleum giants Shell Uganda to sell the latter’s branded fuels and lubricants.
Shell is using a different approach to pullout from the downstream oil business unlike other brands that completely disappeared from the Ugandan market after buyouts.
Despite having new majority shareholders, Shell will continue to be used at all fueling outlets and branded lubricates.
According to Mr Christian Chammas of Vivo Energy and the new majority shareholders’ chief executive officer, the move is geared at helping the new firm to take advantage of the strong Shell brand to expand the business.
He revealed this at the official unveiling of the Vivo Energy Uganda brand in Kampala on Wednesday.
Mr Chammas added that the firm will also invest in increasing its storage capacity to meet the increasing demand for oil products in the market.
He also said the firm will deploy best practices, invest in the construction of more outlets to grow its market share by between 20 and 30 per cent within the next three years.
Vivo Energy operates 1,185 retail stations under the Shell brand and has access to about 900,000 cubic metres of storage.
Vivo Energy, a joint venture between Vitol Group, a Dutch firm Vitol, Helios Investment Partners – an African private investment firm and Shell was established on December 1, 2011 to distribute and market Shell-branded fuels and lubricants.
This comes on the heels of the conclusion of a sale contract between Royal Dutch Shell and the two firms where Shell sold majority stake in its African business that deals with retail, distribution and storage of petroleum products.
20 per cent stake in the firm is owned by Shell while Vitol and Helios Investment own 40 per cent stake in the firm. Vivo Energy will now manage and run fueling outlets and the distribution chain of Shell branded fuel and lubricants originally done by Shell.
According to the details of the deal, Vivo Energy will pay loyalties to Shell for using the Shell brand.
The Dutch Petroleum company has been slowly divesting from downstream oil business with experts hinting that that company wants to concentrate more on the upstream oil business which involves exploration, drilling and supply, which has proved more lucrative according to market experts.
Mr Ivan Kyayonka, the Vivo Energy Uganda managing director said the downstream business in Africa was not as profitable as the firm would have wanted, thus the sale.
He added that Africa is exciting and has huge potential for investors but it was not as profitable to Shell as they would have wanted it to be. That’s why they thought it wise to sell stakes to a firm with expertise to grow it.
Currently, it operates in 13 countries including Uganda, Kenya, Namibia, Botswana, Senegal, Tunisia, Morocco and Mali, among others.