The Kenya Pipeline Company (KPC) is embarking on upgrading facilities owned by the defunct Kenya Petroleum Refineries Limited as it seeks to boost its storage capacity.
The State-owned corporation has advertised for bids from eligible firms to help it upgrade the refinery for storage.
Experts say the upgrade of the refinery will significantly cut perennial inefficiencies that characterise the country’s petroleum products supply chain, which translates into high prices at the pump.
The increased storage capacity at KPC is expected to save oil marketing firms millions of shillings paid to shipping lines as demurrage charges.
The upgrade comes weeks after KPC concluded the takeover of the defunct KPRL.
“KPRL invites sealed tenders to carry out cleaning, painting and repair of LPG tanks 610 and 611 and vessels V601A & V601B at Kenya Petroleum Refineries Limited, Changamwe, Mombasa,” said KPRL in tender documents.
“(KPRL) invites sealed tenders to carry out maintenance works and services for the Kipevu Oil Terminal (Kot) Jetty Booms inspection and maintenance services and works at KPRL Changamwe,” added KPRL.
Experts say it will take significant investment to connect them to jetties in ports and tweaking crude containers to hold clean fuel. About 254 million litres are reserved for refined products while 233 million litres are for crude.
The refinery became idle in September 2013 as Kenya opted to start importing processed oil.
The refinery has remained inactive since 2013 after plans for a Sh121 billion upgrade were abandoned.
Then the government said the investment was not economically viable.
Petroleum Principal Secretary Andrew Kamau said recently the acquisition of the refinery by KPC was one of the government’s strategies to ensure a steady supply of petroleum products, not only in Kenya but also in other East African countries.
He added that the facility is set to become a region’s petroleum products feeding hub to compete with Dar es Salaam which has been dominating the market for years.
Essar Energy Overseas Ltd, which had for seven years held a 50 percent stake in the refinery, pocketed $5 million (Sh568 million) from the National Treasury when it exited in 2016.
Currently, the Government owns the refinery 100 percent.
Established more than 50 years ago, the Changamwe-based KPRL has 45 tanks with a total storage capacity of 484 million litres.
KPRL was placed under the management of KPC in 2017 as a storage facility for imported crude oil after Indian investor Essar failed to revive the country’s only oil refinery.