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Total to give rivals storage space as Gapco buyout is approved
The Common Market for Eastern and Southern Africa (Comesa) Competition Commission has ordered French oil marketer Total to open up storage facilities of a regional dealer it has acquired to third parties, as a ¬condition for approving the takeover. The regional competition watchdog also wants Total to honour contracts Gulf Africa Petroleum Corp (Gapco) has with its employees. Total Outre Mer SA agreed to buy Gapco from India’s Reliance Industries for an undisclosed amount last May as it seeks to strengthen its presence in Africa.
Reliance, which had 76 per cent stake in Gapco, and the minority shareholders agreed to sell their holdings for cash to Total. On Friday, the regional agency said the transaction did not raise any competition concerns in the rest of the common market. “The competition concern in the Kenyan market pertained to the provision of storage facilities to third parties post-merger and employment issues. We noted that Gapco is one of the significant players that provide storage for third parties, and expressed concerns that the post-merger entity may not provide storage to third parties,” it said.
The watchdog added that following the concerns, both Total and Gapco have submitted undertakings to remedy the competition fears in Kenya. “The undertakings relate to maintaining the provision of storage facilities to third parties and ensuring that Gapco will honour the short-term and long-term employment contract currently in effect,” it said. Total sought the Comesa nod for a merger between it and Gapco in July.
“The commission assessed whether the proposed transaction between the parties would have the effect of substantially preventing or lessening competition,” said the regional regulator in a press statement. With the acquisition, Total aims to raise its market share in Africa from 17 per cent in 2015 to more than 20 per cent. “This acquisition is in line with Total’s growth strategy for the distribution of petroleum products and services in Africa, which aims at expanding in fast-growing regions while maintaining high profitability,” Momar Nguer, president Total Marketing and Services said in May.
Gapco’s assets in Tanzania, Kenya and Uganda include logistic terminals, 108 fuel stations, and 260,000 kilo-litres of storage capacity. Total currently operates a network of more than 4,000 fuel stations in Africa. Marcus Davenport Jersey
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