French oil firm Rubis takes $26m forex hit in Kenya

French oil multinational Rubis took a Ksh3.9 billion ($26.6 million) hit in forex losses in the six months to June in the local market, highlighting the impact of the weakening of the Kenya shilling.

The oil marketer disclosed the losses in its half-year to June report, adding that the local market has since last year been plagued by ‘extreme currency tensions’.

Rubis, like other oil marketers has since last year been hit by a sharply depreciating shilling amid dollar access hitches, eating into their earnings despite growing sales.

The weakening shilling was a significant contributor to the growth of Rubis’ forex exchange losses from all its markets in the half year to Ksh10.13 billion ($69.1 million) from Ksh1.49 billion ($10.2 million) in the same period last year.

“The half-year was marked by extreme currency tension in Kenya and Nigeria, peaking in the latter country with a 50 percent devaluation of the naira on 8 June, exacerbating the exchange rate losses recorded during the half-year, which reached $70.8 million compared to $10.5 million in 2022,” Rubis says in the report.

Rubis recorded sales of Ksh70.3 billion ($479.5 million) from Kenya in the six months to June, as it firmed its grip as the third biggest player in the local market after Vivo Energy and TotalEnergies Marketing Kenya.

The French multinational controls 10.02 percent of the local market behind TotalEnergies which has a 17 percent share. Vivo Energy— retailer of the Shell branded products –is the market leader with a 23 percent share as at the end of last year.

Rubis is now betting on State measures to stem the slide of the shilling and strengthen the inter-bank market to ease forex exchange woes in the remaining part of the year.

Kenya in April started a government-backed deal with the United Arab Emirates and Saudi Arabia to import fuel on a 180-day credit period in a bid to ease the monthly demand for dollars and prop up the shilling against foreign currencies.

The deal that will lapse in December has revived the interbank market besides slowing down the depreciation of the shilling against the dollar.

Under the deal, the sector is paying the three oil importers (Oryx Energies, Galana Oil and Gulf Energy) in Kenyan shillings, a move that has eased pressure on their forex demands.

The trio then pay their UAE and Saudi Arabia counterparts in dollars and the first payment will be made on September 25.

“The significant foreign exchange losses recorded in the first half of the year should fade with the measures taken in Kenya to counter foreign exchange risk,” Rubis added in the report.

Oil firms last year turned to cross-currency swaps to guard against future depreciation against the dollar amid a shortage of the greenback.