KZN Oils wins fuel supply contract from Transnet

Apr 27, 2003 02:00 AM

Durban businessman Rajen Reddy was all smiles after landing the biggest contract of his life. Reddy's KZN Oils was one of seven empowerment companies awarded a R 2.4-bn contract for the supply of 318 mm litres of fuel a year to Transnet.
KZN Oils received the third-biggest chunk of the contract, worth about R 780-mm. The parastatal, the largest consumer of petroleum products in the country, awarded the contracts for the next three years.

Other empowerment companies to benefit from the deal included Exel Petroleum, BP South Africa, Caltex Oil, Total/Calulo Investments, Shell/Tepco and Engen/Afric Oil. "We are naturally thrilled as KZN Oils is the only privately-owned company sitting alongside the giants of the industry," said Reddy.
Engen -- of which 20 % is owned by Worldwide African Investment Holdings, which in turn has a 55 % stake in Afric Oil -- was the biggest winner with an allocation of 79.7 mm litres of fuel a year. Second was Exel with 72.5 mm litres while KZN Oils was allocated 62.5 mm litres. The oil industry is spread over the retail, commercial and refining sectors.

Reddy entered the commercial sector in 1998 and KZN Oils soon became the first private company in South Africa to supply marine fuel to the port of Durban. Reddy's links to the fuel industry run deep.
His grandfather, S.V. Reddy, ran a wood and coal business in the 1940s and 1950s. After completing matric, Reddy started off as a labourer at a construction company. He soon started his own company before buying a petrol station. It was at his filling station that he cut his teeth and "discovered the opportunities that lay ahead in the energy sector in the late 1990s".

KZN Oils began by supplying lubricant oil to the port of Durban. Today the company is a major player servicing over 300 clients. Turnover for last year stood at around R 220-mm.
Transnet's CEO, Mafika Mkwanazi, said the billion-rand deal was a sign of the parastatal's efforts to turn small and medium oil enterprises into "mainstreamplayers". "We are now expecting more changes in the industry after these grants. Some companies that did not transform enough got allocated less in terms of volume," Mkwanazi said.

Source: Sunday Times
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