Indian firm begins work on Sh4.8bn Pipeline terminal

A consortium led by India’s Prashanth Project Ltd has started the Sh4.8 billion expansion of Kenya Pipeline Company’s fuel terminal in Nairobi to hold extra petroleum products when a new pipeline from Mombasa becomes operational next year.

The consortium comprising Prashanth and Kenya’s Nyoro Construction has been handed the project contract which involves building four storage tanks with a capacity of 133.52 million litres – equivalent to 22 per cent of KPC’s total national capacity of 612.32 million litres.

The Nairobi terminal with a capacity of 100,528 cubic metres is currently the second largest after the Kipevu oil storage facility that holds 326,333 cubic metres of petroleum products.

“The project is ongoing and is expected to be completed within 24 months,” Jacinta Sekou, KPC’s spokesperson said.

Kenya is under pressure to boost its storage facilities to stabilise supplies. It has no strategic reserves and relies solely on oil marketers’ 21-day oil reserves required under industry regulations.

“The objective of this project is to provide sufficient capacity for receipt of higher volumes of products expected once the Mombasa-Nairobi pipeline is replaced, enhance operational flexibility and provide a window for tank maintenance when they fall due and maintain adequate stocks for petroleum products to cushion the economy from product outages when there are delays in importation or failure of the system,” KPC said in a tender document in reference to the Nairobi terminal expansion.

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Persistent fuel shortages caused by inefficiencies at the country’s only refinery in Mombasa have frequently hit the county that is heavily dependent on the commodity for transport, power generation and agriculture.

This has been worsened by an aging pipeline between Nairobi and Mombasa that is prone to leakages.

Much of the refined oil has to be trucked to neighbouring land-locked countries, meaning extra expense for consumers. Road transport is slow and unreliable due to the breakdown of trucks and damaged roads.

KPC last week called for bids for the financing of construction of the new 450-kilometre pipeline.

The government is seeking up to Sh43 billion in loans to pay for the building of the fuel pipeline.

Petroleum dealers said the expansion of KPC’s terminal in Nairobi would help address the congestion at Kipevu and boost supplies in the capital and beyond.