By NLM Writer
It is a Thursday mid-morning and at a Total petrol station in the outskirts of Nairobi, Peter Waruru* (not his real name) watches as his staff serve customers who are already lining at the forecourt.
It is a busy time and all its all hands on the deck. By any estimation, the station is in business proper.
Yet the same cannot be said of Peter. He runs a station that has a turnover of more than Sh10 million a month yet his take home is so meagre he is even embarrassed to talk about it. “They give us a pittance yet we generate millions for them,” he says of Total Kenya.
“My relatives know that I run a petrol station and the expectation is that I am floating in money. Some take offence when I cannot help them out with jobs or offer financial support. In reality, I am doing worse financially than some of them,” he says focusing his gaze on the attendants as the import of his words sink in.
Across town, along Kimathi Street, and the station adjacent to Airtel Kenya headquarters on Mombasa road, two former operators have been kicked out of the stations to on flimsy grounds. And it is not just them. Total Kenya has dozens of pending cases with financial dealers who feel frustrated by their abrupt variation of rent and terms of tenancy.
The story of Peter and the financial dealers all boils down to one thing: Total Kenya’s Young Dealer Programme. A noble programme started in 2009 styled as a corporate social responsibility (CSR) programme to enable young people own and run petrol stations in the country, those under the programme as well as established financial dealers speak of exploitation that tends towards slavery, intimidation, harassment and an oil marketer that operates on impunity.
Under the programme, Total Kenya was to select some young people who have business potential and give them stations to run. In the course of running the stations, the multinational would retain a certain amount from the profits the station generates for each Young Dealer. A target would be set for the Young Dealer to reach in savings after which they would then graduate into independent financial dealers.
The way it was structured, it sounded like a noble programme that would not only expose many young people to entrepreneurship but also management since they would be in charge of attendants.
Reports suggest that since the programme started in 2009, Total has graduated just five young dealers who are now financial dealers. But since then, no one has graduated to the level of independence that financial dealers enjoy.
Poor pay for the young dealers (some earn as little as Sh35,000 a month despite being in charge of stations that generate up to Sh15 million monthly), no rest day for the Young Dealers, sudden and arbitrary variation of terms including rent and the portion of sales Total Kenya saves for them per litre are some of the issues these entrepreneurs have to deal with.
“They call us business partners but we are not because we don’t have a say in the business. We are essentially their lower cadre employees,” a young dealer who spoke to Nairobi Law Monthly said.
“They expect you to work 24 hours without rest. Any off day has to be approved by them yet they claim you own the station,” another said.
According to another young dealer, the initial Marketing License Agreement (MLA) he signed with Total was that the oil marketer would save for him Sh0.50 for every litre sold, also called security deposit. A young dealer needs to reach his target of the security deposit so as to graduate to an independent financial dealer.
However, along the way, the young dealer says the terms of MLA were arbitrary varied and Total now reduced the security deposit to Sh0.10 per litre sold.
“What this means is that as a young dealer I will have to work longer so as to attain my target. They changed the terms and the programme structure and are now looking at the once-noble programme as their source of profits. It is exploitation of Kenyans by a multi-national, the same way Shell did in Nigeria,” said the dealer.
The young Dealers also have a problem with Total’s retention of the security deposit. Despite holding the money for several years, they complain that it doesn’t earn interest. Instead, the oil marketer deducts from the kitty in case the station makes a loss or fails to meet its sales targets.
“Our MLA says that if a Young Dealer drops out before graduating, Total is the one that decides what to do with the security deposit so far retained. It is a very lopsided agreement that makes one a slave of the corporation. You are frustrated but you cannot opt out because you will lose all what you have worked for,” the young dealers lament.
But this is not the end of their woes. Despite the frustrations and their meagre earnings, some Total managers have been demanding bribes from young dealers so that they can doctor reports of their evaluation of the stations. At least one senior manager has been sacked in recent times after Total discovered that he had been receiving monthly bribes from dealers.
Among the financial dealers, there are complaints of deliberate frustration by arbitrary rent reviews, non-attendance to dealer complaints about under deliveries and leaking tanks, poaching of staff from financial dealers to absorb them into the Young Dealer programme, and cancellation of the MLAs on flimsy grounds.
At the Mombasa Road station, adjacent to Airtel headquarters, the former deal told a similar story. Because of age, the old man had let his daughter help out with the day-to-day management of the station. After trying to dislodge him from the station, which is one of the most profitable in Nairobi, without success, Total Kenya then seized on her daughter to accuse him of flouting the terms of the MLA. They then kicked him out of the station. When the dealer sued, the oil marketer, after protracted negotiations, opted for an out of court settlement.
Regarding the station on Kimathi Street, the financial dealer who was running the station was kicked out after he complained of leaking underground fuel tanks that Total Kenya had failed to repair. Shortly after he was kicked out of the station, Total suffered one of the most embarrassing public occurrences when eight cars were filled with a mixture of fuel and water.
Other financial dealers who have been kicked out on such flimsy grounds include some who ran stations along Thika Road, Eldoret and Nyeri.
As the frustrations grow over the Young Dealers programme, the industry association, the Kenya National Petroleum Dealers Association (KENAPEDE) has written several letters to the Energy and Petroleum Regulatory Authority (EPRA) and the Competition Authority to bring to their attention the frustrations of their members.
In a letter to the Ag. Director of Petroleum and Natural Gas Directorate, Edward Kinyua, Kenapede secretary-general Anthony Kuria on January 23, 2019, highlighted the problems Total dealers were facing across board. These included underground tanks and pipe leakages, and repairs being done without involving dealers. “This is to ensure that these leakages are not made public and dealers are not compensated for the losses that occur (as a result of the leakages),” Mr Kuria stated in the letter.
Regarding the Young Dealer programme, Kuria noted that Total Kenya has been competing with financial dealers “using supposed CSR initiatives that have been turned into oppressive programmes.”
“Generally, good staff are ‘stolen’ from financial dealers and handed stations to run with the promise of being graduated into financial dealers in the future. Initially, the programme was noble and successful. However, it has been turned into a system of threatening financial dealers with immediate replacement if they do not toe the line. In addition, young dealers are treated as disposable ‘slaves’ who have no say in the decision making process despite running the businesses on a day to day basis,” the letter stated.
Kuria also faults Total Kenya of cheating the young dealers of financial dealership only to turn around and milk them of the profits by arbitrary rents, levies, policies and procedures to ensure they never rise to become financial dealers.
“Total Kenya has a policy of transferring young dealers from station to station and insists on new contracts to prevent young dealers from graduating into financial dealers. Transfers can be done on the basis of improvement on the current location or massive and unjustifiable increase in rent,” he lamented, adding that young dealers are not allowed to question any policy or decision of Total, calling such economic slavery.
Kenapede raised similar concerns with the Director-General of the Competition Authority Francis Kariuki vide a letter dated February 19, 2019. On the same day, a letter raising the same concerns as the one sent to Kariuki was sent to EPRA director general Pavel Oimeke.
None of the letters have been responded to. And chances of the letters ever being responded to by EPRA are growing slimmer each day, because Total also has representatives in EPRA. Total Kenya’s former strategy and corporate affairs director Macharia Irungu, now Kenya Pipeline. Corporation MD, sat on the EPRA board until he moved to KPC.
Similar requests by Kenapede to having a meeting with Total have also been ignored and an official of the Association said the oil marketer is not keen on meeting anyone who appears to challenge their policy positions. “They are a multi-national and they want to load that on Kenyans,” the official said.
In our subsequent issues, we expose: (1) How Total-KE, working with officials from the regulator, EPRA, imposes illegal levies and taxes on its dealers through threats and intimidation; (2) Improprieties in its upstream operations in Kenya and Uganda; (3) Tax evasion schemes.
Nairobi Law Monthly will now free online during the coronavirus period.
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