Work on parallel fuel pipeline begins

CfC Stanbic Bank, Barclays Bank of Kenya, Commercial Bank of Africa, Citibank, N. A Kenya and Kenya Commercial Bank are KCB’s partners in the Sh8.2 billion syndicated loan for Line 4.CfC Stanbic, Commercial Bank of Africa, Citibank and KCB will each lend KPC Sh1.6 billion while Barclays Bank of Kenya Ltd will advance Sh1.5 billion.

KPC is to raise Sh6.6 billion for the project.

One of the banks in the financing syndicate --KCB -- is seeking to recover Sh2 billion from the Triton saga under a collateral financing agreement it had entered into for the stocks that disappeared from the pipeline system.

Under the system, the pipeline should not release products to marketers without the consent of the financiers.

Energy ministry and KPC have termed the Triton case as theft of property held in trust .

MPs, tax payers and oil marketers have expressed concerns over the recent expansion of the Line 1-Mombasa-Nairobi Line to double the white petroleum products flow-rate from Mombasa to Nairobi 880,000 litres per hour and demanded that the Sh8.1 billion project’s engineering, prompting corrective engineering works to be undertaken at the Kipevu Oil Storage Facility (KOSF) to up the suction pressure.

Road transport is twice as costly as pipeline transport. Between Nairobi and western Kenya, transportation along the pipeline costs Sh3.20 per litre of fuel while transporters charge Sh7.50 per litre of fuel trucked.

Trucking rates are higher due to demand for the few available trucks following restrictions on weight limits.

“We are still facing constraints over the pipeline. The line is not fully operational as numerous tests were not done before commissioning,” said one industry CEO

Increasing the flow of the pipeline is also critical to meeting growing demand in Uganda, Rwanda, Burundi and Southern Sudan and reducing reliance on oil tankers for transporting petroleum products to those markets by road, damaging surfaces.