The government has affirmed its plans to set up a liquefied petroleum gas (LPG) storage facility in Mombasa, that could become a shared pool for importers.
Speaking at a press conference in the Mombasa governor’s office last week, Energy CS Davis Chirchir said the import handling facility will be built at the Kenya Petroleum Refineries Limited (KPRL) facility, soon after Kenya Pipeline Company (KPC) fully takes over KPRL.
He added that the acquisition process is on the verge of completion, following robust consultative engagements between the Ministry, KPC, KPRL and the County Government of Mombasa in the last few weeks.
“I am pleased to inform you that the acquisition of KPRL by KPC will be finalised in the next few weeks. The Cabinet-approved acquisition will see KPC acquire KPRL by way of transfer of shares without any monetary compensation," Chirchir said.
"The acquisition is envisaged to facilitate KPC to expedite pipeline operations and enhance storage capacity for petroleum and petroleum products thereby fostering synergy in the petroleum value chain."
He reiterated that the move will further seek to stabilise the supply of petroleum products in the country and ensure cost-efficiency through reduced demurrage costs.
The acquisition according to the CS, will also ensure optimal utilisation of the 370 acres of beachfront KPRL facility, thereby enabling the government to put up bulk LPG import handling and storage facilities.
"This is with a view to increase Kenya’s LPG consumption from 7 kg per capita to 10kgs in the next 3 to 5 years,” Chirchir said.
Investors early this year while expressing their interest in the project noted that the facility will be a game changer in the oil market.
Fossil Supplies Ltd for instance, in its regulatory filings to the National Environment Management Authority (Nema) noted that the LPG facility is a common user for oil oil marketers.
"This will enable them to access an alternative for importation and supply of liquefied petroleum gas at a competitive price to the end users,” Fossil Supplies said.
It added that the new facility if approved would help relieve demand pressure in the country by reducing stock-outs.
Nevertheless, it said the facility would seek to end Africa Gas and Oil Ltd’s monopoly, which owns the 10,000-tonne LPG storage facility that handles more than 90 per cent of imported LPG, with smaller players paying to use it. Government-owned Shimanzi Oil Terminal has a 1,400-tonne capacity. Kenya has an annual LPG consumption demand of 300,000 metric tonnes.
Kenya has an LPG consumption demand of 300,000 metric tonnes per year.