By Moses Kaketo
Driving outside Kampala, you are welcomed by well-planned newly built and spacious fuel stations.
That is Stabex International Limited for you.
Started eight years ago, the oil company has grown by leaps and bounds. Data from the Petroleum Supply Department, Ministry of Energy and Mineral Development, reveals the oil company now ranks number three after Vivo Energy Uganda Limited [trading under the Shell brand] and TotalEnergies in Uganda – formerly Total Uganda limited.
Vivo Energy leads the market with 18 percent followed by TotalEnergies with 16 percent. In third place is Stabex International.
There are over 60 oil companies In Uganda. Others with reasonable market share in order are: Nile Energy Limited, Gasline Petroleum Energy (U) Ltd, Hass Petroleum (U) Ltd, Moil (U) Ltd, & City Oil.
Founded in Nairobi, Kenya in 2012, Stabex International Limited is making this happen where some oil companies are either struggling or were swallowed up -Inland, Super Oil among others.
Within a space of eight years, they have managed to achieve big milestones. They are succeeding where the big boys: Caltex, GAPCO, Kobil Uganda, Engen failed.
Experts attribute Stabex International success to; a clear, well thought strategy. As one market analysts put it ‘’ who knows, they may be market leaders tomorrow’’
The company started with a small depot in Nansana along Hoima-Kampala road, mainly supplying small players [including: Union Energy, Jab Petroleum, Hashi Petroleum among. From these, the company made a killing. During this time, they were studying the market, and identifying gaps-if any to fill.
Indeed, there were gaps.
The Herfindah Hirschman index value, which is used to determine the level of concentration and Competitiveness amongst industrial players stood at below 649.71
It was clear, there was room for more players. Armed with this information, they rolled –out, with a unique strategy- perhaps they picked lessons from the players who quit the market.
A comparative market price review reveals Stabex International petroleum [quality] products are slightly lower than competition – TotalEnergies and Shell. Multinationals have huge costs to meet including at times having to meet overhead costs incurred at their headquarters. Such costs have to be reflected at the pump prices.
A typical Ugandan is price sensitive and will always do price comparison before buying. Stabex International price strategy has paid off, as more drivers have turned Stabex fuel stations their preferred choice.
Lucrative Liquefied Petroleum Gas (LPG) market
at 89% untapped market, the oil & gas marketing company saw an opportunity. Figures from the Petroleum Supplies Department indicate Uganda’s gas import have been on the rise- jumping to 18m kilograms in 2020. That is not all, oil companies make over UGX, 1200 profit per kilogram.
Not to miss out on this lucrative market, two years ago, Stabex launched their own gas. Currently, Stabex International ranks as the cheapest provider of LPG Cylinders in Uganda. You can get the brand’s gas cylinders at, Gaz, Fuelex, and other stations that support multi-vendor products. They have also recruited several distributors to reach out to all customers. In areas where they do not have physical presence, they do deliveries for those who order online.
Focus on core business
One of the main reasons why some oil companies are either struggling or closed shop is wanting to get involved in everything.
Stabex does not give credit to distributors and its partners. The oil firm entered into an alliance with Equity bank. When their suppliers & distributors [said to be financially stable] run out of cash, the oil and gas giant recommends them to Equity bank,- which gives them great convenience to leverage on their core business.
The Stabex has three directors: two Kenyans and one Ugandan. The directors are said to financially stable and experts in the fuel business. The company therefore has sufficient capital to stock enough petroleum products. The Company has also subcontracted a large fleet of over two hundred articulated vehicles/ tankers for transit distribution.
Who consumes all the oil?
The average total consumption of petroleum products In Uganda is 1,500bn liters, out of which diesel is the most consumed. At 69%, transport sector [mainly road] consumes the biggest portion.
Stabex, joined the market at the time when nearly all [if not all] the strategic locations in Kampala were taken. In fact Shell and TotalEnergies opted to buy out existing small players in strategic locations within Kampala. That can only be done by the big boys with lots of cash at their disposal.
Kampala continues to expand, Stabex moved outside Kampala and acquired strategic spots which are relatively cheaper.
Partnerships- the way to go
Stabex also supplies fuel to bulk users including; transport, construction, mining, marine, factories and government institutions. Some of them include: Kakira Sugar, Dott Services Uganda Limited, China Railway, Abubakar Construction Limited. The fast-growing oil firm also has working partnership with other players including: Oryx Uganda, Prime Lubes Limited, Nile Energy, Shire Petroleum, Banoda Petroleum, Tosha Uganda and Delta Petroleum.
Non fuels- the new growth area
Stabex is responding to changes in the marketplace. Fuel stations today offers, more than fuel. Stabex fuel stations are spacious and that is for a reason.
The plan is to make them a one stop center. The idea is to promote cross-selling and customer loyalty. Today’s Customer is likely to prefer fueling at a station where they can easily grab a bite other than fueling at one and then driving around looking for something to eat. Plus the business of networking entails that people will most likely agree to meet at a venue that is convenient.
Take a case of Shell Bukoto; there are over 10 business located at the fuel station. And indeed Shell is making a killing. Stabex has already entered into partnership with Pearl chicken. And more partnerships are in the pipeline.
also read: Shell, TOTAL cashing in on non-fuel
Focus on the future
Stabex seems to be looking far: electric cars are taking shape In Europe and it will not take too long before they arrive here. The European Union has already agreed to end sales of combustion engines by 2035. As they say, the future is for those who are prepared: with ample, space at their fuel stations, charging cars at Stabex stations will be easy.
Who exactly owns Stabex international?
The company has been linked to a top, loaded and influential Kenyan politician, however, according to the registrar of companies report, the firm has a nominal share capital of 500, 000,000. Jackson Kiplimo Chebett is a majority shareholder owing 925,000 ordinary shares.
also read: Shell Vs TOTAL: who is the Goliath?
About the author
Moses Kaketo is a Marketing and Distribution expert. He sees business in everything. He loves writing business news, reviews and analyses.