Hashi Energy in Sh14bn deal with Dubai firm

What you need to know:

  • The deal, signed Wednesday with SS Lootah, will involve building infrastructure and storage facilities for food and fuel supplies.

Petroleum dealer Hashi Energy has signed a Sh14 billion ($140 million) deal with a Dubai conglomerate that will see the firm diversify into the supply of food to military personnel and non-governmental organisations in the Democratic Republic of Congo (DRC).
The deal, signed Wednesday with SS Lootah, will involve building infrastructure and storage facilities for food and fuel supplies.

Hashi Energy has pre-existing contracts with the United Nations mission in the DRC for transporting and storing petroleum products. 

This new funding will enable Hashi to expand existing services and venture into food supplies.

“Our focus is the military-like base. It is remote, in places without much infrastructure. Food diversification comes in because we now have a partner who has got over 40 years experience in the industry,” said Hashi Energy group chief executive Mohamed Adan. The United Nations mission for the stabilisation of the DRC had over 19,000 personnel as of June 2015, and the market niche may prove lucrative for Hashi — which is known for its interests in distribution of petroleum products in Kenya.

Mr Adan said that the company will seek to expand logistic operations into other countries in the region including the Central African Republic (CAR), Chad and Burundi.

SS Lootah is 60 years old with interests in construction, trading and energy. The deal with Hashi is part of the company’s growing interests in Africa. 

The company has invested in Tanzania’s energy sector while Dubai Islamic Bank, partly owned by the Lootah family, is seeking entry into the Kenyan market.

Executives from SS Lootah were recently in the country as part of a delegation led by the Dubai Chamber of Commerce and Industry. The delegation held talks with public and private sector leaders.

The chamber has opened its first representative office in Nairobi. It hopes to increase trade with Kenya as part of a push by the United Arab Emirates to expand non-commodity investments in the country.

Recent forays by Dubai firms into Kenya include the acquisition of CMC Holdings by Al Futtaim and the opening of several Carrefour stores in the country by Majid Al Futtaim.

More Dubai companies are interested in investing in tourism and healthcare but are concerned about the cost of doing business locally.

“The problem which they are facing is taxes, especially on equipment. We have investors, many hospitals are ready to coordinate with the Kenyan government or the private sector,” said UAE ambassador to Kenya, Abdul Razak Mohamed Hadi.

There is a huge trade imbalance between the two countries in favour of the UAE. While Kenya imported goods worth Sh91bn from the UAE in 2015, its exports were valued at Sh29bn.

This story was edited to correct an erroneous conversion of $140 million to Sh14 billion as per the current exchange rate.