Cover Story

Climbing a slippery slope

Without sacricing her religious beliefs or her femininity, SUMAYYA HASSAN-ATHMANI has risen to the top of Kenyas cut-throat energy sector. We look back at her personal panache in the corporate world, as she primes herself for the next step By Aamera Jiwaji

er 9th oor oce, which is three sides wall and one side glass, offers a panoramic view of the city starting at Nairobi Serena, crossing Central Park and stretching into the busy streets of the Central Business District. When I watch the trafc from up here, she said, I can see how we are making the situation on the roads worse for ourselves. She turned with a smile, a blue silhouette against the reected grey of the glass. It was just one sentence in a conversation of many that morning, and would have been unremarkable if it had come from anyone except Sumayya Hassan-Athmani, Managing Director of National Oil. But as the head of the state corporation in Kenyas energy sector - a country on the brink of becoming an oil producer - her o the cu comment was telling. It spoke of vision and perspective, and showed she was much more than a poster girl for the
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changing role of women in modern society. As we went to press, Ms Hassan-Athmani had been shortlisted for the position of Permanent Secretary, suggesting she may ascend the next rung in the ladder of achievement.

Changing tides
When Ms Hassan-Athmani took over the helm of National Oil in 2011 from former MD Mwendia Nyagah, the industry was surprised. But the controversial exit of her predecessor and that the position had been vacant for a seven month period during which time she was acting MD, did not raise as many eyebrows as the fact that she was the rst woman to head a company in Kenyas competitive and at times ruthless energy sector. However having risen through the ranks, her knowledge of the internal workings of the company - from the legal and the corporate aairs side - seemed to be a boon. From where I was sitting, I had a wide view of the whole company, she said. Her portfolio had allowed her to interact with employees, the Board, directors and stakeholders in managing

the brand, and this cross section of exposure was consolidated when she was appointed Deputy MD. She looks back to her legal training as a cornerstone of her achievements. While some decades ago, companies were isolated in their approach to business and preferred to operate as stand alone entities, today the industry is dened by partnerships, she said. Her legal background has been particularly useful since todays global environment is about managing these partnerships and relationships. Ms Hassan-Athmani considers herself to be one individual in the wave of change that has aected the way global business is practiced today. Many years ago, an oil exploration company was headed strictly by technical people like geologists because at that time it was about drilling and nding the oil. It was the science, she said. The second stage was where oil companies were being headed by nance people because [drilling] results have been found and now it is about numbers and accounting. The prediction was that the third phase of

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The 39 year-old CEO of National Oil has a strong background in law, which has helped her manage partnerships in todays changing global arena.

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Cover Story

CEOs of energy companies would be lawyers because it is now about partnerships and joint ventures, she said. These three phases were outlined by a senior manager at a global oil and gas company. As she narrated how in anticipation of this change of guard, his company was deliberately grooming a lawyer as the number two for the MD position, she said that what was running through her mind was how at the time she was Deputy Managing Director and her MD was a nance person. On our side it was a coincidence; on their side it was a deliberate strategy, but I found that what he was saying is exactly what has happened. Right now it is all about joint ventures and partnerships and strategic alliances, she said. The implications of this evolution in business leadership style can be seen across sectors, she continued, and today a telecommunications company is partnering with a bank; a housing company is partnering with an ICT company because competitive advantage requires you to keep innovating and to keep looking at who you are partnering with, and how can you deliver better value. This, she believes, is the crux that denes a companys future competitiveness.

Holding hands with locals

Oil is oil, Ms Hassan-Athmani said, touching on how the product she deals with is homogeneous and has a standard quality across brand lines. We are not competing on product quality, she added since all the major companies are ISO certied, oer a low sulphur content and use the same pipe line. But if it isnt about the product, then what differentiates the service that National Oil oers? It is a question that forces her to look outside the energy sector. Henry Ford once said that if he had asked his customers what they want, they would have said a faster horse, she said with a laugh, because that is all that was there at the time. But as the provider you have to be ahead of the customer. You have to ask what will they want next? As she shepherds National Oils growth in a sector that has become more competitive since the discovery of commercially viable deposits of oil at Ngamia-1, she is forced to continually ask what will set National Oil apart from its competitors. I learnt strategy implementation from a
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sailor, she said proudly, and so her answer which she acquired from a presentations by a sailor who has voyaged some of the roughest seas in the world - may herald National Oils second strategy change in under 30 years. The state corporations rst change of direction took place in 1994 when it lost its mandate to import 30% of Kenyas crude oil requirements and this precipitated a diversication into downstream activities. In the last 16 years, National Oil has expanded its outlets from three in 1997 to six in 2004 when Ms HassanAthmani joined the company, and today it has 106 stations. They intend to double this number in Kenya by 2015. This extension of services has been achieved in part through partnerships with individual land owners and the application of a cost sharing model that sees National Oil construct a petrol station on a private plot, and then recover their construction costs from sale of the fuel. This approach which sees a state corporation partnering with citizens for the rst time was developed to counter the skyrocketing costs of land which created competition between companies like National Oil who wanted to set up a station and property owners who wanted to invest in land. The second tender for this partnership project closed at the end of last month and, received over tens of thousands of applications from interested Kenyans, The project secured media headlines in May when National Oil oered to build former President Mwai Kibaki a petrol station as a retirement gift. The news was received with outrage by Kenyans and members of the board who were not privy to the decision, and Ms Hassan-Athmani later conrmed that the farewell gesture, estimated at Sh50 million, was made in the spirit of the companys public private partnership project. Former President Kibaki would provide the land and National Oil would construct the station and later recover costs from the sale of fuel. National Oil has also enhanced its countrywide reach by aggressively acquiring over 60 stations from individuals and oil marketers, including BP and Somken in past years. Recent media reports suggest that another buy out worth Sh25.5 billion is currently underway, which will see National Oil take over 160 petrol stations, and the distribution infrastructure of a leading marketer who intends to exit the market. Market intelligence suggests the company is Kenol Kobil which reported a Sh6.3

Henry Ford said that if he had asked his customers what they want, they would have said a faster horse. But as the provider you have to be ahead of the customer
billion loss in 2012 from a net prot of Sh3.3 billion in 2011, after its sale to Swiss based Puma Energy fell through earlier this year. The only other major market operator is Shell which was recently sold to Vivo Energy.

Pounds to save pennies

National Oils projects which require a heavier capital inlay include the construction of an o shore petroleum jetty and a 90-day strategic national fuel reserves, which will help convert

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This is because her vision for the growth of the energy sector is strongly regional. For as long as we continue to look at projects on a national or a territorial basis, each of us as countries within this region will be uncompetitive, she said. The oil reneries in India, for instance, she said are so large that it is impossible for a country like Kenya to independently compete with them. Even after adding the cost of freight from India to Kenya, it will still be cheaper to buy their product, she said. Kenyas competition is not Uganda and neither is it Tanzania. When we move beyond that and see that Africa [as a continent] is competing, then we start thinking globally and will be able to add real value, she said, and hopes that the benets of economies of scale will encourage national companies to pull together and build a renery, a regional pipeline and a storage facility for the region. She continued, Natural resources are being discovered but you will not be able to extract maximum value unless your infrastructure is globally competitive. These plans, like the multi-billion shilling deals on prospector blocks which she has overseen, will involve delicate negotiations but Ms Hassan-Athmani nds herself to be uniquely qualied to handle them. The oil industry can be as slippery as the oil itself, she said but instead of this being a complication, it allows her to set National Oil apart from other industry operators. When people nd they can trust you in a straight level, especially when you are talking about doing big projects like what we are doing, it helps, she said. And so, contrary to perception, her youth, soft spoken and friendly nature, and conservative dress works to her advantage. This is about relationships. Underlying them you have contracts and legal instruments but a fundamental part of it is trust and people knowing you have the integrity to do what you say you will do.

National Oil has 106 stations in Kenya, compared to six in 2004 when Ms HassanAthmani joined the state corporation.

Kenya into a petroleum trading hub. Currently in the country we have one oil jetty. It is Mombasa in the Kipevu channel and the channel is relatively shallow even after you dredge it, she said. The complication, she continued, was that for economies of scale to have any impact large quantities of oil were needed and so the smaller the quantity brought in, the more expensive the product. The second challenge of having just one jetty in the country was the exorbitant demurrage charges that accrue- either when fuel tanks are full or the jetty is busy. Every day a ship is held at the jetty - beyond the window for discharging free of cost - the ship owner loses revenue from doing business elsewhere, and so he charges the client delaying him the revenue he would potentially earn on the next job. Demurrage charges are on average $25,000 (Sh2.1 million) a day per ship, and when calculated on an annual basis the penalties are

debilitating. In mid 2011, National Oil initiated the construction of a floating or a single buoy mooring jetty (which will cut dredging costs) o the coast of Mombasa where the waters are deeper, and it plans to complement this with the construction of undersea pipes and on-shore storage tanks. The feasibility study for the project has been completed and National Oil has embarked on sensitising stakeholders and partners, in order to begin construction by early next year. The total project cost is around $500 million (Sh42 billion) and will take two years to completion.

Culture clash
But dont expect to shake her hand when you sign a deal with National Oil. Her refusal to shake hands with men is a faith based choice and she admits it has worked against her, especially in a business environment where a meeting typically begins and ends with a handshake. In her oce, her secretary forewarns male visitors but at external venues it is more awkward and has
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Partners not competitors

While growing their presence in Kenya, the 39 year old also has ambitious plans for the region. National Oil is already exporting its products into neighbouring countries, but she she foresees them moving infrastructure across the borders as well.

Cover Story

SUMAYYA HASSANATHMANI
PROFESSIONAL DETAILS Managing Director | National Oil Corporation of Kenya Nairobi, Kenya | 2011 - present Deputy Managing Director | National Oil Corporation of Kenya Nairobi, Kenya | 2007 - 2010 Company Secretary/Legal Manager | National Oil Corporation of Kenya Nairobi, Kenya | 2004 - 2007 Seven years practising commercial law and litigation, conveyance and intellectual property at dierent law rms in Kenya EDUCATIONAL HISTORY Bachelor of Laws (Hons), Lancaster University - 1994 Master of Laws in Commercial Law, University of Bristol - 1997 Diploma in Law, Kenya School of Law - 1998 Advanced Management Diploma, Oxford University University of Oxfords Business School,
Her cultural dress has made her somewhat of an enigma in Kenyan business circles, as has her strict adherence to other Muslim principles.

Oxford University Professional positions Advocate of the High Court Director at Centre for Corporate Governance

created the impression that she is arrogant. She however takes it in her stride. This is not about them, she said. This is about me and my faith and it is a path I have chosen to tread. I dont mean to oend anybody and if they have been, I believe it is because they have not understood. This is not the only challenge she has faced in her position. Another is based on her gender. People cannot believe that I am the CEO of a national oil company because this industry is by and large controlled by men, she said. But contrary to a time when women tried to camouage the fact that they were women and behave like men just so they could t in, women in leadership today are slowly developing a exible corporate structure where there are no apologies for being a woman, she said.
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A few years ago would you have seen someone who looks like me and dresses like me heading an organisation such as this, she laughed. Ms Hassan-Athmani came head to head with National Oil chairman Peter Munga last year when he attempted to micro manage the state corporation and instructed her not to attend any parliamentary committee meetings without his approval. The odds were weighed in his favour in terms of power (one of Kenyas richest men), seniority and inuence (Chairman of Equity Bank and Britam, Micro-Enterprise Support Programme Trust, Kenya Genetic Resource Centre, Equatorial Nut Processors and Fresho International) but she emerged unscathed from the experience with her management independence intact suggesting her soft exterior masks a core of

steel. This altercation followed a controversial procurement blunder in 2011 worth Sh90 million.

Neither government nor a company

As the MD of a state corporation, she treads a ne line between heading an organisation that has 100% government shareholding, and which is incorporated under the Companies Act and therefore expected to operate as a commercial entity where prot is paramount. The marketers and your competitors look at you like government because your shareholding is government, she said. Government looks at you as a commercial company and says: Hey, sort yourself out in the market. While their initial expansion to 34 stations was nanced by government - although she

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emphasised that they received nancing from them as a shareholder and not in their position as government - their growth since has been independently funded through debt and retained earnings. As far as downstream operations are concerned, it is independent of government funding and has an annual turnover of Sh30 billion. Their dual corporate identity has meant that in as much as National Oil needs to stay competitive in the market, it is required to serve the public good, While this is not the traditional approach for growing market share, it has worked in their favour, and she predicts that National Oil will grow market share from just under 10% this year to 25%-30% by 2030. One of their recent innovations is the entry into the rural market - an area considered virgin territory as far as energy provision is concerned. There are still places in Kenya today where people are carrying fuel in jerry cans because where they are going there are no petrol stations, she said. I want to take the stations there. My competition wouldnt do that because there is no business but in my view taking aordable energy somewhere is a catalyst for business growth. Second, she has balanced the need to stabilise the market not by oering fuel at the lowest cost but by increasing retail variety. My customers want to pay based on what they have in their pocket, she said explaining the thinking behind National Oils launch of a gas cylinder that can be relled based on monetary value and not volume. Another project she and her team are working on is taking LPG (liqueed petroleum gas) to rural areas through the 3kg Super Kadogo cylinder. National Oil is also researching the supply of piped gas directly to the house, as is done in countries like India. We are hoping to move people from carrying cylinders to turning on a metered knob in your kitchen, she said. Her recently established Research and Development section is also looking into bio fuels. Her closing advice to anyone aspiring to a leadership position in a sector as competitive as energy: Dont take yourself too seriously. Appreciate that you are but one piece - and not a very big piece - in the whole spectrum. The sun will rise and set with or without you. Take things in your stride, do your best and make an impact but dont take yourself too seriously.

BLACK GOLD

National Oil, and the energy sector

National Oil mandate has had to reinvent its mandate to remain relevant in an increasingly competitive oil and gas sector.

he National Oil Corporation of Kenya is a state corporation with 100% government shareholding. Its formation was precipitated by the 1970s oil crisis and the correspondent supply disruptions and price hikes which resulted in Kenyas oil bill comprising almost one third of the total value of imports, thus making petroleum the largest single drain of Kenyas foreign exchange earnings. It was felt necessary to have greater control of the energy sector by having a company which would act as an instrument of government policy in matters related to oil. National Oil became operational in 1984. Its initial activities consisted of exploration and in 1988 National Oil went downstream and started importing crude oil into the country. This was in fulllment of the governments mandate for National Oil to supply 30% of the countrys petroleum requirements. These supplies were sold in bulk to major oil marketers at a small margin prior to processing. One of National Oils major roles was to act as an advisor to the government on

pricing and policies. Their experience in procurement prevented unjustied price increases, and in some instances, the corporation brought in all the countrys petroleum crude and nished product requirements when private companies had declined to do so in order to pressurize the government to concede to demands for price increases. This was especially evident during the Gulf War when National Oils imports sustained the country for six weeks - making Kenya the only country in East and Central Africa which did not experience a shortage. In 1994, the oil industry was deregulated and National Oils mandate to import 30% of Kenyas crude oil requirements ceased. The corporation entered into downstream operations to remain relevant and since then has been marketing petroleum products to nal consumers. National Oil is also involved in upstream activities and is exploring for oil and gas in its own Block 14T. In midstream, the corporation is working on establishing strategic national petroleum reserves and an oshore oating petroleum jetty.

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