A strategy of hope for fuel consumers

A worker at Total Petrol Station on Uganda Highway in Eldoret town adjusts prices on their price board on February 15, 2017 after the Energy Regulatory Commission reviewed fuel prices upwards. PHOTO | JARED NYATAYA | NATION MEDIA GROUP

What you need to know:

  • The KPC has mooted new projects to harness resources to enhance capacity, integrity, security, efficiency and expand into new business lines and markets.
  • The government intends to convert the Kenya Petroleum Refineries Limited into a storage facility as the country gears up for commercial oil production.
  • The KPC continues to invest in enhancing the pumping capacity to meet the rising demand for refined petroleum products.
  • The additional storage is also expected to improve the safety, reliability and efficient delivery of products to customers.

The February Energy Regulatory Commission (ERC) announcement that saw the super petrol price crossing the Sh100 mark for the first time in two years triggered a major public debate as global prices have been fairly low.

The discussion has attracted the attention of Kenya Pipeline Company (KPC) because some experts have attributed the high pump prices to poor vessel planning, slow evacuation of fuel and storage hitches that lead to high demurrage charges.

Cheaper, safer and accessible energy for all Kenyans remains the bedrock of our growth strategy. This is why the KPC has developed a 10-year Strategic Plan dubbed ‘Vision 2025’.

The KPC has mooted new projects to harness resources to enhance capacity, integrity, security, efficiency and expand into new business lines and markets.

One of the key initiatives is the recently signed lease agreement with Kenya Petroleum Refineries Limited (KPRL) in Mombasa for the next three years awaiting conclusion of the acquisition of the facility to boost storage and reduce the oil supply chain challenges that have hit the consumer hard.

COMMERCIAL OIL PRODUCTION

The government intends to convert the refinery into a storage facility as the country gears up for commercial oil production. The KPRL has 45 tanks for various products with a total networking capacity of 484 million litres. This will give the country and the region more storage capacity, reducing the demurrage charges that run into billions of shillings annually (the charges oil ships accrue are passed on to the consumer).

The KPC continues to invest in enhancing the pumping capacity to meet the rising demand for refined petroleum products. One of the major projects is the construction of a 20-inch pipeline to replace the ageing 14-inch Mombasa-Nairobi pipeline. The new 450-kilometre pipeline, a Vision 2030 flagship project, is expected to meet demand for petroleum products until 2044. The annual demand for petroleum was 5.7 billion litres last year, up from 4 billion litres in 2013. 

The new line will adequately serve the country, as demand is projected to be 6.8 billion litres in 2020. Regionally, the combined demand for Rwanda, Uganda, Burundi, eastern DRC, South Sudan and northern Tanzania in 2010 was 2.4 billion litres and 3.5 billion litres last year.

The additional storage is also expected to improve the safety, reliability and efficient delivery of products to customers. The new line plus the additional storage will remove 400 trucks from the roads daily, saving the government billions of shillings spent annually on road maintenance and minimise petroleum tanker accidents.

EASE TRANSPORTATION

The KPC has put up a new 10-inch 122-kilometre pipeline from Sinendet in Nakuru County to Kisumu. Operationalised in April last year, it now ensures availability of ample petroleum product volumes in western Kenya.

The line, which also serves Uganda, eastern DRC, Rwanda, Burundi, and Tanzania, has made it possible to invest in the Kisumu oil jetty, whose construction begins next month to facilitate safe and efficient transportation of petroleum products through Lake Victoria to the neighbouring countries.

The jetty, which will take six months to build, is expected to boost the fuel delivered through Kisumu by a billion litres a year in the first phase and up to 3 billion litres a year by 2028. It has the potential to turn Kisumu into a focal point of oil and gas commerce in the region and one of the busiest inland ports in Africa. 

This will increase KPC’s competitive edge as the leading oil transporter and reduce road fuel transport, especially to Uganda and the region. With a much bigger pipeline network coming up, the KPC is putting up additional storage tanks in the Nairobi Terminal to more than double the storage capacity of diesel and super petrol from the current 100 million litres to 233 million litres.

The construction of the four tanks, each with a gross capacity of 33,366,000 litres, will provide sufficient capacity for receipt of the higher volumes of products expected once the Mombasa-Nairobi pipeline is replaced.

Once fully implemented, these initiatives are expected to have huge economic benefits for Kenya and the region. The projects will enhance efficiency and innovation in fuel supply logistics with the potential to reduce the cost of fuel and spur socio-economic growth.

Mr Kimani is the general manager (strategy) at Kenya Pipeline Company