Kenya Pipeline to build LPG storage plants as demand grows
Kenya Pipeline Company plans to build new liquefied petroleum gas (LPG) storage and bottling plants from next year as part of a strategy to help meet growing demand for the commodity in the region.
KPC Managing director Selest Kilinda said facilities planned for Nairobi would be completed and commissioned by the end of 2014 before embarking on similar projects in other major urban centres a year later.
“KPC is focusing on development of LPG facilities in Nairobi. We intend to commence construction work in the year 2013 and commission the facilities by the end of year 2014.
Phased development of other inland facilities should commence in the year 2015,” he told the Business Daily.
The company, he said, would assess the capacity required to ensure availability and accessibility of LPG at affordable costs to households through a study.
“KPC intends to review planned facilities capacity to ensure their adequacy to match current and future demand,” Mr Kilinda said, adding that an LPG study would be commissioned soon.”
A study jointly conducted by the Energy ministry and the World Bank in 2005 recommended that LPG facilities with a total capacity of 8,700 tonnes be set up in Nairobi, Mombasa, Kisumu, Eldoret, Nakuru and Sagana.
Mr Kilinda said the study had recommended development of LPG facilities at Mombasa (6,000 tonnes), Nairobi (2,000 tonnes), Nakuru (150 tonnes), Eldoret (200 tonnes), Kisumu (300 tonnes) and Sagana (50 tonnes).
The cost of the bulk LPG import handling, storage and distribution facilities in Mombasa was estimated at $28.6 million while that of establishing the inland facilities was put at $43.3 million.
“The cost of putting up the facilities would be much higher now given the rise in costs of construction materials and equipment,” Mr Kilinda said.
Demand for LPG in Kenya and the east and central Africa region is currently constrained by lack of LPG import facilities at Mombasa and a weak distribution network.
Data by the Kenya Bureau of Statistics showed that demand for LPG in the country has increased in the last five years from 49,400 tonnes in 2005 to 87,800 tonnes in 2010, an increase of about 78 per cent.
The study of had estimated LPG demand in Kenya at 76,674 tonnes by 2010 and that in other countries in the region at 17,105 tonnes.
Storage capacity, however, was low at 3,960 tonnes comprising 1250 tonnes LPG tanks at the Kenya Petroleum Refinery Limited (KPRL), 1300 tonnes at Shimanzi Oil Terminal and 1410 tonnes owned by the oil marketers.
Besides boosting the LPG storage capacity, Kenya also plans invest up to Sh 100 billion to develop a strategic national petroleum reserve to stabilise supplies.
Persistent fuel shortages due to inefficiencies at Kenya’s only refinery near Mombasa have plagued key sectors of the economy such as transport, power generation and agriculture.
The reserve will hold about 1 billion litres -- equivalent to 90 days consumption -- and help ease disruptions in the supply chain.
Kenya presently relies on oil marketers’ 21-day oil reserves required under industry regulations.
It is seeking more than $1 billion to increase the refining capacity to process 4 million tonnes of crude per year from 2.6 million tonnes now.