Ola Energy, the fourth largest oil marketing company, said it has commenced a restructuring of its local unit in a move that would see some of its employees declared redundant.
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.
The firm on Wednesday said it had been experiencing major challenges in Kenya in recent years that had resulted in substantial drop in revenues and profits.
It added that shareholders had injected significant capital into the business but this had “however not yielded the expected returns”.
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 regrets, that we need to implement a redundancy program,” said the firm in a statement on Wednesday, adding 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.”
Manufacturing sector
The woes that may have pushed the firm to restructuring could be linked to the difficult operating environment in Kenya that has seen firms shed jobs. The Federation of Kenya Employers last month noted that 5,567 Kenyans have been declared redundant from their workplaces over the past three years, with the manufacturing sector bearing the brunt of the job losses. Due to reduced disposable income, Kenyans have also slowed 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.
Ola Energy made the announcement a day when 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. 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 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.
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“These margins are not absolute margins,” he said, explaining that in addition to oil marketers’ profits, they are also meant to cater for companies’ operational expenses including staff, and electricity as well as investments that the retailers are required to make to ensure that they meet their licensing requirements.
“We have not changed the margins since 2018 but the minimum wage has been increased almost every year. It is important that we reflect the market realities of today in the pricing related environment.”
