Engen and Shell service stations to undergo divestiture

Martin Endjala

Following Vito Emerald Bidco (Pty) Ltd’s acquisition of Engen Ltd, including its subsidiary Engen Namibia (Pty) Ltd (“Engen Namibia”), the Namibia Competition Commission (NaCC) has mandated a major divestiture to ensure competitive market conditions.

This decision is part of the conditions imposed on the acquisition, as outlined in Notice No. 805 of Government Gazette No. 8274, dated 12, 2023.

The Competition Commission’s conditions necessitate the divestiture and transfer of 58 Engen and Shell service stations, along with their retail supply agreements, on reasonable commercial terms.

This move is designed to address concerns about the merged entity acquiring a substantial market share in certain areas.

According to the public notice shared in the media on Tuesday, the divestiture will include, without limitation, the leases over the properties on which company-owned, dealer-operated service stations are situated.

It also includes those company-leased, dealer-operated, and dealer-owned, dealer-operated service stations.

The notice clarified that the company would transfer the leases over to the dealer-operated stations.

In the cases of dealer-owned, dealer-operated service stations, the retail supply agreements between each independent dealer and Vivo Energy Namibia Limited (“Vivo Namibia”) or Engen Namibia will be part of the divestiture.

Until May 21, 2025, Namibian-owned undertakings or consortia that own less than 10% of the country’s retail service stations must make the divestiture required by the notification.

Thereafter, the restriction will disappear.

Vivo Energy Namibia and Engen announced in May that they had completed the transaction to combine their respective businesses.

PETRONAS sold its 74% shareholding in Engen to Vivo Energy, creating a pan-African energy champion.

The two companies announced in February last year that they would combine their businesses to create one of Africa’s largest energy companies.

The combined group will have over 3900 service stations and more than two billion litres of storage capacity in 27 African countries.

Engen is South Africa’s market leader, with around 1300 service stations in seven African countries.

Vivo Energy is a major pan-African retailer and distributor of fuels and lubricants to retail and commercial customers, with over 2600 service stations across 23 African countries, using the Engen and Shell brands.

According to a recent statement, Stan Mittelman, the chief executive officer of Vivo Energy, said the focus has been to invest in growing its business and is proud that they have more than doubled the size of their network since its formation in 2011.

“Four years ago, we acquired the Engen business in nine African markets and have since worked to enhance and develop these. Vitol’s acquisition of 100% of Vivo Energy last year brings more opportunity to grow even faster,” he said.

Completing this transaction, which reunites the Engen brand across Africa, will be a step change in our growth and represents a significant commitment to the South African market while enhancing Vivo Energy’s portfolio in other important markets,” he said.

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