Kenyan Petroleum Refineries

 The African Business Journal

Kenyan Petroleum Refineries Limited (KPRL) of Mombasa, Kenya, was originally formed by Shell and British Petroleum back in 1959. Their intention was to create a company to serve the East African region in its supply of oil products. Incorporated in 1960 under the name East African Oil Refineries Limited, the company changed its name to Kenyan Petroleum Refineries in 1983; 12 years after the Government of Kenya acquired a 50 per cent share which they retain today.
On July 31 2009 the scoop hit our headlines. Kenya Petroleum Refineries Limited (KPRL) swept across our newswires announcing that ‘ESSAR Energy of India acquired a 50% stake of KPRL bringing to a close a process that begun in 2007’ in their press release.
This was big news for KPRL and we caught up with John Mruttu, General Manager, to hear about what this means to the future of the company.
“We really have four strategic goals at KPRL at the moment. The first is to increase shareholder returns 15 per cent by 2012” Mruttu says.
“The second goal is to increase the customer and stakeholder satisfaction to 90 per cent. The third goal is to attract and retain a competent, motivated and productive workforce thereby reducing turnover to less than four per cent by 2012. And our fourth and final strategic goal is to continue to be recognised as a responsible corporate citizen and to contribute to sustainable development.”
These goals are clearly portrayed by the projects, partnerships and efforts undertaken by KPRL today.
KPRL: The Responsible Corporate Citizen
“In terms of flagship projects which fit in with our strategic goals we have the construction of residue conversion facilities to improve the processing efficiency of the refinery, to construct facilities for the storage of LPG importation and handling, cleaning up our products to meet the new specifications that are coming and finally own-power generation too” Mruttu summarizes.
In meeting their fourth goal, KPRL are working to improve their own facilities and reduce their impact and footprint on the locality.
“We are currently commissioning our wastewater treatment facility which gives us two benefits. The first is that it helps us to clean up our effluent and once the water has been cleaned up it can of course be recycled” Mruttu says.
“Water is in chronic short supply in Kenya and being able to recycle in this way means that we take up less water from the city mains and the water we don’t
take up is going to be available to the communities of Mombasa. It’s not a very big project but for us it is certainly very interesting.”
Social responsibility appears to be another key factor for the company, as Mruttu explains the different ways in which the company has approached educating, supporting and caring for the local community amidst the threat of HIV and AIDS.
“We’ve worked quite a lot with youth groups, supported them with materials, attend their gatherings and facilitate resource persons on HIV/ AIDS awareness programs. This has been a main social focus with us for a number of years now” he says.
“We also work actively with colleges and schools. We donate computers and desks, we support the boy scouts and girl guides, and equally these involvements feed into the work that we do with HIV and AIDs because part of this work involves taking these children in the schools through the same programs to raise their awareness on the threat of disease.”
KPRL: A Motivated and Productive Workforce
It is not only amongst the local communities that KPRL strives to educate, inform and nurture, but in the workforce too. Mruttu enthuses about the quality
and dedication of the KPRL team and explains that the company places great emphasis on cultivating this in their employees, beginning with college-level
scholars searching for their taste of time in industry.
“A lot of people attending technical colleges in Kenya need a period of about three months over which they work in the industry so at KPRL we provide
that for polytechnics and a number of universities. We take on the students and help them to gain a deeper appreciation of what really happens in industry” he says. Like many of his peers, Mruttu himself possesses broad experience and understanding of the different roles within the company.
“I’ve really done all sorts of jobs in the field ranging from being a mechanical engineer to project engineer, and engineering manager, manufacturing manager and my current role as the general manager of KPRL” he explains. This experience and appreciation for others at different career levels and directions has enabled KPRL to meet their strategic goal for their workforce head-on.
KPRL: Increasing Shareholder Returns and ESSAR
The recent news of ESSAR’s 50 per cent share acquisition bodes well for KPRL.
“Up until the 31 July the shareholder’s were the Government of Kenya with 50 per cent and BP, Chevron and Shell were holding the other 50 per cent” Mruttu explains.
“BP, Chevron and Shell sold their equity to ESSAR Oil Limited of India on July 31 so now the Government of Kenya holds 50 per cent and ESSAR Oil holds the other 50 per cent. We have eight directors on that board; 50 per cent from the government and 50 per cent from ESSAR – four directors on the board for
each shareholder.”
Mruttu is optimistic about this latest development, but highlights that the company has enjoyed a history of successful shareholder relationships throughout its 50 year lifespan too.
“Certainly for the company getting a new shareholder who’s strategic intentions are aligned to what the company also intends to do really gives us an opportunity to grow, move and organize the company as we seek to meet the national demand for petroleum products and that we will do by investing in new processing units to improve efficiency and also in cleaning up our product” he says.
“The relationship with our previous shareholders – Shell, BP and Chevron – goes back 50 years. This history and interaction has certainly helped to grow our company culture and that’s something which we are very strong in now. We have very strong core values in integrity, honesty, respect for people,
high technical and industry standards. Certainly the interactions we have had with these three companies have allowed us to grow and shape our core values.”
KPRL: Tomorrow
Despite this latest high profile news, Mruttu has a realistic and honest approach to what the coming months may hold for the industry in Kenya.
“One of the biggest challenges from where we sit has been the changes in product specifications. Sometimes in Kenya there is a lack of lead time given and as a result we have to work very hard to meet those specifications. Certainly from Mombasa another challenge we see is the mushrooming of very large world-class refineries in Western India which are really intended for the export market. The challenge of facing up to and rivalling that is quite enormous” he says.
“I can see the global economic crisis affecting us in the future because having crossed the issue of the changes in the shareholding we’re now at a stage where we want to move forward into implementing our projects so in this position where we are going to approach the money market we certainly expect that there will be a number of hurdles to be cleared in order for us to get to the project financing that we need. Right now because we haven’t yet reached the market, we haven’t really experienced the challenges brought about by the economic crisis but we think that as soon as we hit the road running and approach the market, they will become more apparent but I am confident that we will find a way round them.”
While keeping thoughtful and open to what the future may bring, Mruttu explains that KPRL’s short term operational goals remain undeterred.
“We certainly aim to stabilize the electricity supply to the refinery. At the moment our power plants are interrupted quite frequently because we rely on electricity from the grid, so one of our objectives is to solve that problem. The other goal in the short term is to constantly improve the performance of our reformer units.”
With a clear focus on their strategic goals, a strong team, shareholder success and a watchful eye on tomorrow, KPRL is poised to meet any market demand, achieve any target they set and continue to grow and flourish. Regardless of industry twists in trend or the potential for economic pressure in the coming months, this company has the firm foundations for future growth.