Fast-growing East Africa is attracting huge international interest, and its lubricant industry is keeping pace, with multiple blending plants planned. East Africa is more politically stable than many other parts of the continent, and its economic growth is likely to be sustained, according to a presentation prepared for Octobers ICIS Middle East Base Oils & Lubricants Conference in Dubai.
Joseph Ndungu and James Wakiru of consultancy Lubes Africa, Nairobi, Kenya, wrote that East Africa offers huge opportunities to lubricant, base oil and additive suppliers. Key countries are Kenya, with a finished lubricant market of 45,000 cubic meters per year, Tanzania (35,000 m3/y), Uganda (24,000 m3/y), Rwanda and Burundi (5,000 m3/y) and South Sudan (3,400 m3/y).
The region currently is home to five large, modern lubricant blending plants, plus six smaller plants. Total, Shell and Libya Oil have blending plants in Kenya, and Oryx Addax has two in Tanzania. Two blending plants are planned for Kenya, one for Uganda, and another for Tanzania, according to Lube Africa.
The consultancy described nine lubricant markets in East Africa.
Industrial consumers include steel, cement, plastic, sugar and general manufacturing. These buyers are quality sensitive; OEM approvals are an advantage and technical support is necessary.
Large transport fleets look for quality, price and technical support. They demand reliability and frequently insist on just-in-time delivery. Fuel supply can be a key determinant in selecting a lube supplier.
Distributors have a wide customer base and may stock one or multiple brands. They are price sensitive, but also require significant marketing support.
Resellers and spare tire shops stock popular brands and cheap, low-grade products. They are generally serviced by distributors, stock only fast moving products and are usually in close contact with mechanics.
Oil companies wanting to diversify into lubricants have them toll blended. They are looking for price, production efficiency and a level of credit.
OEM garages often have long-term contracts with suppliers, which can be a barrier to entry. They often have strong relationships with multinational lube companies, and demand equipment and technical support, including training and oil analysis.
Fuel suppliers have an edge in supplying lubes to the road construction segment, which is currently booming. Road builders generally want standard grade lubes, and they pay only after being paid by the government.
Power plants demand a full package including technical support. OEM approvals are critical.
Government agencies consume significant volumes of lubes. Supply is through tender, and competition is fierce. But, Lubes Africa cautioned, Corruption is rife.