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December 7, 2016

Volume 17 Issue 52

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Dutch Firm Builds Rwanda Blend Plant

Netherlands-based VPS Lubricants will start blending lubricants in Rwanda in the first quarter of 2017.

Erik Vermeer, commercial director for VPS International BV, said the plant – with 300 metric tons per year production capacity – is a 50-50 joint venture between VPS and Societe Petroliere of Rwanda.

Vermeer told Lube Report on the sidelines of the 5th ICIS African Base Oils and Lubricants Conference last month in Tanzania that VPS is investing in Africa because business there is booming.

“We are looking at producing locally blended lubricants for Rwanda and the regional market. So far we are 80 percent done and hopefully by the first quarter of next year we should be able to blend and market,” said Vermeer. “We have been active in Rwanda for more than 20 years now, so we know the market and have a good market share.”

John Okoth is general manager for African Lubricant Manufacturing Co., which is the local entity that will manage the new plant in Rwanda. Okoth will oversee operations at the semi-automated blending plant, which will be dedicated to serving Rwanda and other regional markets including Congo, Zambia and Kenya.

“If we blend locally, customers will be able to get the product on time as opposed to the spot orders that we get from time to time,” said Okoth.

Vermeer said that the plant is located in the Free Trade Zone of Rwanda. He noted that the tariff – which is based on volume – is 10 percent for base oil and additives and 25 percent for finished products, which makes it attractive to blend lubricants in the country rather than import them.

In the same vein, Jonathan Njine, managing director for Lubesol in Nairobi, Kenya, said that the high tariffs Rwanda charges on imported lubricants offer an advantage to locally blended products.

“I think number one, they will enjoy the fact that exporting to Rwanda is an expensive affair; you pay 25 percent duty on finished product and another 37 percent duty that applies to all imported goods… so the total duty for finished product could be in excess of 62 percent. So you can save that by producing locally and then you can sell to Uganda and Congo, where there are no blending plants,” said Njine.