SA company makes pledge: only in Africa

Engen's footprint in Africa - ever-growing.

In one sense, it is just good business: in a time of African disinvestment by other oil companies, the company has shown a profit in every one of the countries to which it has turned its attention.

Wayne Hartmann, GM: International Business Development says the company is so serious about sub-Saharan Africa that it wants to double its current market share in the region by 2016 (to 16%). By then, it intends being the second-biggest marketer of downstream (refined) petroleum products, with significant increases in the revenue contribution of related businesses. It also wants to remain on top in South Africa.

“This will mean growing our throughput four-fold and increasing our operating income eight-fold,” says Hartmann.

There's no doubting the seriousness of his commitment. A mere nine years ago, when the company became 100% controlled by PETRONAS* (Malaysia's national oil company), it had a footprint only in South Africa, Lesotho, Botswana, Swaziland and Namibia (in which it is also the market leader).

Over the next four years, it grew rapidly further north, creating affiliates in Kenya (1996), Tanzania (1996), Zimbabwe (1996), Zambia (1998), Ghana (1998), Burundi (1998), Uganda (1999) and Mozambique (1999). Engen also supplies its products into a number of other African countries.

Most recently, in December 2007, Engen bought out Shell in the Democratic Republic of Congo (DRC). The statements from both companies at the time reveal very different African experiences. Shell was in essence turning away from less profitable downstream business, while Engen had experienced nothing but positive returns from all its African ventures, whether operating in regulated, deregulated or hybrid markets.

Cautious optimism

It is well known that some of the biggest names in oil are disinvesting from parts of Africa. Within the confines of financial sustainability, this presents clear opportunity for his company, Hartmann says.

“At the same time this will create the space for new investors, which could well change the competitive landscape. Companies such as Oil Libya, Reliance, ESSAR and others are beginning to emerge. In this changing and tough operating environment, there are a number of key areas on which we can focus,” says Hartmann.

So how will the company fight off competition?

“In no small way, part of our past success can be attributed to recognising the strengths, skills and competencies of locals, and the need to embrace and respect cultural, ethnic and religious diversity,” says Hartmann.

As point of proof, Engen employs no South African MDs or FDs in Africa (excluding South Africa, where the FD is a South African).

It is this continuing commitment to using local resources, coupled with a keen eye for opportunity that will increasingly set successful businesses in Africa apart from others.

The future

Engen's African outing is not about to stop in the DRC. Hartmann declines to provide specifics, but remarks that the company will keep looking for opportunities to invest in Africa. Moreover, if the expansion roadmap between 1996 and the present is anything to go by, things could happen more rapidly than prevailing global sentiment on Africa expects.

The Engen footprint

Engen has offices in 14 countries and is represented by agents and distributors in 11 more, mostly in respect of the sale of lubricants. The company operates distribution networks in 13 countries.

*Subsequently, PETRONAS sold 20% in Engen to black empowerment concern Worldwide African Investment Holdings. WAIH is the only South African black-controlled and managed company focusing exclusively on the broader energy sector in sub-Saharan Africa.