How a merger deal left fuel station owners fuming
After two years of negotiations over the sale of 52 Vivo Energy service stations, some fuel dealers say a process meant to protect competition has left them facing chaos and their businesses at risk.
During two meetings in February, the Namibian Competition Commission (NaCC) assured dealers the sale should have no negative impact.
“When we made that decision [about conditions of the merger], the intention was that the dealers [would] not be worse off,” NaCC director of mergers and acquisitions Johannes Ashipala said at the first meeting.
Four months on, some dealers say they are worse off.
Presentations and minutes of the meetings, which The Namibian has seen, show retailers have complained about unilateral contract changes and feared for their businesses.
“This forum was supposed to happen two years ago.
You [the NaCC] were supposed to go and listen first to what the dealers have to say before you even started the process. No, this is – sorry for the word – but this is total chaos,” one person present at the 17 February meeting said.
The sale of service stations was mandated by the competition commission after Vivo Energy bought Engen Namibia, giving the combined company a market share that risked monopolising the industry.
The commission wanted a small Namibian player to take over the stations.
Nasan Energies, which is majority-owned by Miguel Hamutenya, the son of Millenium Group founder Mathews Hamutenya, took over on 27 May.
ABRUPT SUPPLY CHANGES
Although 52 sites were assigned to Nasan, only 41 were sold. Several of the remaining sites have told The Namibian that delays over the two-year process made them nervous about security of supply.
When their contracts with Vivo expired, with no information on who would supply them, they signed with other wholesalers.
Riteway Service Station at Swakopmund, another site The Namibian has reached out to, says its move was blocked by Vivo Energy.
Samantha Wright, representing her parents as owners of the property, says Vivo cancelled their supply agreement on 22 May without warning, five days before all sites were supposed to move to Nasan.
“We had a 15-year fixed term agreement that only the Shell brand would operate here. They cancelled it and left us 24 hours [to figure it out],” she says.
Wright says she then engaged with Nasan and believed they could reach a mutually beneficial arrangement.
Two days later, Nasan told her it could not supply Riteway due to a penalty clause in its contract with Vivo.
“My parents are pensioners and in 24 hours they [Vivo] have ruined their retirement plans. How could the government in good faith believe the dealers would be in a better position?” Wright says.
Riteway is operated by MC Eloff, who bought the rights to the business from the Wright family.
Eloff says he built his business around the Shell brand, with the guarantee that the arrangement would last until 2036.
“Vivo cancelled it on 24 hours’ notice, which left us without a supplier overnight and forced us to move quickly to secure a replacement,” he says.
Eloff, a foreign investor, had to be vetted by the NaCC before the sale was approved.
He says he spent N$200 000 on the review and in good faith “built up a legitimate business, employed Namibians, and paid [his] taxes”.
He was, however, never informed by the NaCC that he was effectively buying into a business the NaCC itself was planning to change.
Several dealers say they had been led to believe they would be allowed to buy their sites, before Vivo later reversed that position.
Some fuel stations are dealer-owned with branding and supply agreements with Vivo.
Others are company-owned dealer-operated sites (CODO), where Vivo owns the site but dealers operate the business.
“We [CODO sites] were all called in as dealers and told by the managing directors of Vivo and of Engen that [we will] have the first right to buy your own service stations,” one dealer said at the 11 February meeting.
At least 10 dealers tried to arrange purchases with Vivo, according to sources close to the matter.
They believed this would secure their businesses while meeting the NaCC’s requirements, as most dealers are Namibian.
“We were assured that we had the right to buy to make sure that we have security of tenure, for our businesses, for our employees, and for our future, because we’ve invested millions in our sites. Unfortunately, what was stated to us by the MDs was changed unilaterally later,” another fuel dealer told the NaCC.
He says Vivo changed its position because it preferred to sell the divested sites as a single package.
“Where do we stand now?” the dealer askes.
Vivo Energy this week said it was reviewing issues raised by The Namibian, but declined to comment on specific allegations.
“We do not consider it appropriate to comment publicly on specific allegations raised.
However, we can confirm that Vivo Energy remains committed to ensuring that the divestment process is conducted in a fair, transparent and legally compliant manner,” spokesperson Lazarus Nafidi said.
Neither Nasan Energies nor the competition commission responded to requests for comment by time of going to print.
