The entry of Taifa Gas Investment SEZ Limited, energy giant from Tanzania, into the Kenyan market is expected to shake-up the energy industry and sparks a pricing war.
The Tanzania firm is investing USD130 million (SH16 billion) in a Liquefied Petroleum Gas (LPG) import, storage and distribution plant at Mombasa’s Dongo Kundu Special Economic Zone (SEZ).
President William Ruto is Friday expected to witness the groundbreaking ceremony for Taifa Gas plant at Dongo Kundu SEZ, where the government has allocated the investors a 30-acre land parcel for the project.
The facility will be one of Kenya’s largest private sector investments in the recent past and among the first multi-nationals cleared to set up base at the 3,000-acre Dongo Kundu Special Economic Zone.
Last year, Taifa Gas conducted an impact assessment study at the site on its proposal to construct an LPG plant, storage terminal and related facilities.
The proposed 30,000 metric tonnes plant is designed to store propane; butane and LPG mix of various grades for domestic, commercial and industrial use.
On Thursday, Taifa Gas Investment SEZ Limited managing director Veneranda Masoum said they will bring healthy competition in the gas industry in Kenya with their their lower prices.
“What we are bringing to Kenya is really the economies of scale. Our storage capacity means that we will be bringing in bigger vessels, which means that we are able to negotiate better prices for the LPG,” said Masoum.
She added: “What I know is that we will be able to import in large quantities pushing the prices downwards and eventually the prices of LPG will go down substantially in Kenya.”
Speaking at a press conference in Mombasa, Masoum said construction is expected to take 12 months and once complete it will offer locals 90,000 direct and indirect jobs.
“This is a substantial investment that will not only address a gap in Kenya’s and the regional gas market but will also create many jobs and sustain livelihoods in the region,” she said.
Taifa Gas, which is headquartered in Dar es Salaam Tanzania, has been in the LPG industry since 2005, trading as Mihan Gas Tanzania Ltd. In 2014, it rebranded to Taifa Gas.
The company supplies gas in Tanzania, Kenya, Uganda, Rwanda, Burundi, and South Africa.
“Mombasa is well placed to penetrate a number of markets in East Africa. For example, it is very close to Kampala, Uganda (about 1,100 km) compared to Dar to Kampala (1,600 km). Mombasa is also close to Somalia, Ethiopia and South Sudan,” she said.
She said this hugely informed the decision to invest in Kenya adding that the project will be the biggest for Taifa Gas Group.
Plans for its entry into the Kenyan market started in 2017, but encountered some barriers before a deal was finally reached in 2021 between the former Kenyan President Uhuru Kenyatta and Tanzania’s Samia Suluhu.
“Finally, our investment in Kenya is finally paying off. We had wanted to get into the Kenyan market since 2017, but we were not able,” said Masoum.
In Tanzania, the company has a storage plant with a capacity of 7,450 metric tonnes and 25 depots in all major towns, making it the biggest LPG company in that country.
Part from a 30,000 metric tonnes storage plant in Mombasa the firm will have depots in Nairobi, Eldoret, Kisumu, Nanyuki, Meru, Kilifi, Turkana and Kiambu among other major towns.
On Wednesday Trade and Industry Cabinet Secretary Moses Kuria toured the Dongo Kundu SEZ site and met with some of the people affected by the project.
Kuria assured the residents, who have been complaining of being left out of the compensation plan, will be adequately settled.
The national government has set aside Sh1.4 billion for compensation of 1,582 Project Affected Persons (PAPs). The government will also subdivide 384 acres into parcels of land for the resettlement of another batch of 1,684 PAPs.