The decision will mostly affect domestic investors since the majority shareholder can cushion its growing operating expenses with its consolidated results. 

The board of TotalEnergies Kenya will not distribute interim dividends though the company ended the first half of 2022 with cash and cash equivalents estimated at Ksh10.5 billion (about US$88.16 million).  

With a reported net profit of Ksh795.5 million, distributing dividends wouldn’t have hurt the company’s cash position. However, that net profit is down by 113% year-on-year, we learn. 

According to company executives, the rise in revenues (Ksh46.2 billion or about US$385.2 million) was mitigated by an increase in marketing expenses and fees because of the government's delay in validating a fuel price revalorization while prices were rising sharply on international markets.  Also, the depreciation of the Kenyan currency against the US dollar sent TotalEnergies Kenya’s import bill flying. 

The decision not to distribute interim dividends will only affect Kenyan shareholders. Indeed, the expenses that caused a drop in the company’s net profit are offset by the activities of the parent company, which is the majority shareholder. Its main supplier is another subsidiary of its parent company so, the rising operating expenses incurred by TotalEnergies Kenya will be offset in TotalEnergies SE’s consolidated results. 

The TotalEnergies Kenya experience provides an insight into what can happen to oil marketing companies fully owned by African investors. As they usually have no international subsidiaries to cushion the growing operating expenses in consolidated results, the rising price of petroleum products may negatively impact them, and perhaps threaten their ability to continue operations.