Kenya Pipeline Company (KPC) has taken over operations and maintenance of the Sh40 billion Kipevu Oil Terminal 2 (KOT2), targeting to improve the supply of petroleum products in the country and East African Community States.
KPC management signed a Service Level Agreement (SLA) with the Kenya Ports Authority (KPA) to run the facility, which can handle four ships at a time and cut ship demurrage charges.
In the deal, KPC will lease the facility and coordinate the supply of petroleum products to its reserves in Changamwe before being pumped countrywide.
KPC managing director Joe Sang said KPC will use the 100 million litre storage facility to store oil products to ensure a constant local and regional supply.
“By signing the agreement with KPA, we shall be able to maximise economies of scale by importing products on time and storing them in our reservoirs to ensure stable price determination,” said Mr Sang.
The MD said KPC is working on the conversion of the crude oil line to accommodate refined products to enable the system to pump the products from the terminal to the Kenya Petroleum and Refinery Limited (KPRL) tanks which they secured recently.
In August last year, KPC acquired KPRL with 45 tanks with a total storage capacity of 484 million litres out of which 254 million litres are reserved for refined products while the remaining 233 million are for crude oil.
The increased storage capacity at KPC will save oil marketing firms millions of shillings paid to shipping firms as demurrage charges.
Taking over the operation of KOT2, Kenya set to become a region’s petroleum products feeding hub to compete with Dar es Salaam which has been dominating the market for years.
Kenya is also using the newly constructed $170 million (Sh22.83 billion) fuel jetty in Kisumu to woo Uganda, which is its main transit market, to start importing fuel from Mombasa.
“In the agreement, we have ironed out some of the issues including the challenge of having a testing lab within Mombasa port which will reduce the time of conducting the exercise. Despite funding challenges, we intend to complete conversion of the crude oil line in two months and begin construction of a four-kilometre, 24-inch diameter LPG line to reservoir tanks in Changamwe,” said Mr Sang.
KPA managing director William Ruto said the terminal can discharge 8,000 litres per hour and more companies are invited to apply to connect the terminal.
“KOT2 has the capacity to connect different companies and has already applied to connect to the terminal at the port of Mombasa,” said Mr Ruto.
The National Environment and Management Authority (Nema) and Energy Regulatory Authority (ERC) have received applications from more than five companies seeking to construct gas facilities in Mombasa.
