Kenya Pipeline Company (KPC) has begun collecting views from stakeholders on its proposed tariffs review which will affect import handling, primary storage and truck loading.
Energy and Petroleum Regulation Authority Director General Daniel Kiptoo said KPC manages several common user petroleum logistic facilities crucial to the storage, transportation and distribution of petroleum products across Kenya.
He said they include the pipeline network, storage depots, jetties and loading terminals.
“KPC charges the tariffs for the usage of its infrastructure, and these tariffs are reviewed and approved every three years through a public participatory process facilitated by EPRA,” Kiptoo said.
Kiptoo said under the Energy Act of Kenya 2019, EPRA is mandated to ensure fair and reasonable tariffs for KPC services.
He was speaking in Nairobi on Wednesday, October 2, 2024, during a consultative workshop on the review of KPC tariffs.
“Section 11B of the act empowers the authority to set, review and approve tariffs and contracts related to common user petroleum facilities and products,” Kiptoo said.
He said all refined petroleum products imported into the country, premium motor spirits, automotive gas oil; and dual-purpose kerosene come through the Kipevu Oil storage facility (KOSF), Kenya Petroleum Refinery Limited (KPRL) and VTDI Kenya Terminal based in Mombasa.
“In addition, KPRL has petroleum products, truck loading and LPG import handling facilities,” Kiptoo said.
He said KPC uses the rate of return approach in its determination of tariffs, a method that involves calculating the allowed rate of return of KPC’s regulated assets, considering factors such as depreciation, operating costs and throughput projections.
“For the controlled 2024-2025 to 2026-2027 period, KPC has proposed tariff increases for its import handling and primary storage services. These increases will be 24 per cent in 2024-2025, followed by 8 per cent in 2025-2026 and 1 per cent in 2026-2027,” he said.
Chief planning officer KPC Elizabeth Akinyi said the core mandate of KPC is to handle petroleum products that are imported for local consumption.
“We have storage facilities in Mombasa that include Kenya Petroleum Refinery Limited and Kipevu Oil Storage facility,” she said.
She said there is a hydrant system at Jomo Kenyatta and Moi International Airport that is used to fuel products directly from the depot to the aircraft.
“We recently constructed an Oil Jetty in Kisumu in efforts to serve and open up the region,” Akinyi said.