Oil marketer Ola Energy to lay off staff in restructuring plan

Ola Energy, the fourth largest oil marketing company, said it has commenced restructuring of its local unit in a move that would see some of its employees declared redundant.

In a statement, the firm said that it has found it difficult to sustain its current fixed costs, pushing it to embark on a “strategic business restructuring process aimed at significantly enhancing its profitability and market share in Kenya.”

Ola Energy, previously known as Oil Libya, is Kenya’s fourth largest oil marketing company (OMC), a position it has retained for years.

It did not disclose how many staff members would be affected, but said that the process would be “managed with utmost sensitivity.”

In the Kenyan oil market, Vivo Energy leads with a 22.07 per cent share, followed by TotalEnergies with 14.88 per cent and Rubis with 14.05 per cent while Ola has 7.5 per cent.

Other oil marketers hold a combined market share of 34.44 per cent. It added that shareholders had injected significant capital into the business but this had “however not yielded the expected returns”.

The firm joins the growing list of companies that are opting to send employees home in a bid to stay afloat locally, with recent industry data showing firms across different sectors have shed off more than 5,000 jobs over the last three years.

Kenyans have been declared redundant from their workplaces over the past three years, with the manufacturing sector bearing the brunt of the job losses.

The firm, which has 112 petrol stations across Kenya and 132 employees, said it had embarked on a strategic business restructuring aimed at “significantly enhancing its profitability and market share in Kenya over the next five years”.

The restructuring is expected to see some of its employees lose their jobs.

“Ola Energy Kenya is finding it difficult to sustain its current fixed costs. It is, therefore, with deep regret, that we need to implement a redundancy program,” said the firm in a statement on Wednesday.

It added that it started to implement a plan that would push sales and cut costs.

“During the past year, Ola Energy Kenya initiated a rescue action plan with several initiatives to turn around the trajectory the company was taking, including increasing sales and reducing costs. Through this restructuring, we are committed to reversing the current trends and positioning Ola Energy Kenya for sustainable growth.”

The tough economic environment in the country has seen families reevaluate their budgets, with the majority slowing down on their consumption of petroleum products, with the usage of diesel and super petrol having grown by a modest one per cent in 2024.

Last week, the Energy and Petroleum Regulatory Authority (Epra) announced it would be increasing fuel prices as it sought to give oil marketers and fuel transporters higher margins.

The regulator said it would increase the cost of super petrol by Sh7.80 per litre, diesel by Sh7.75 per litre and kerosene by Sh7.67 per litre.

Epra noted that business costs had increased but margins for the industry had remained static for years, posing a challenge for many players, especially the small-sized oil marketers and transporters.

The regulator is seeking to adjust the money earned by industry players who cannot adjust prices to reflect what Epra noted are realities of the business environment due to the regulated nature of pump prices.

Epra said it would increase the cost of super petrol by Sh7.80 per litre, diesel by Sh7.75 per litre and kerosene by Sh7.67 per litre.

Epra Director General Daniel Kiptoo noted that a lot had changed for the industry but margins had remained the same since 2018, when the Authority last reviewed margins for marketers and 2010.