Oil marketer Ola Energy is set to expand its liquefied petroleum gas (LPG) import handling and storage capacity to 15,450 tonnes by next year as it seeks a bigger share of the cooking gas market.
The company currently has an LPG storage capacity of 450 tonnes at its terminal in Mombasa, with the investment marking a major upgrade of the facility that was built more than 15 years ago.
The infrastructure was put up to enable the handling of bulk imports of cooking gas, ultimately lowering unit costs through economies of scale.
“We expect to expand our storage capacity by 15,000 metric tonnes from 450 metric tonnes so that we can buy larger vessels and make it more competitive,” said Ola Energy Kenya general manager Millicent Onyonyi.
“The larger the vessel the better the price and therefore the better the cost of the product.”
The import handling and storage unit will help relieve demand pressures through reduction of stock-outs, effectively reducing the price of LPG that has been rising fast in the last few months.
The cost of refilling a 13-kilogramme cylinder, for instance, has increased to about Sh3,500, reflecting the impact of increased taxation and higher prices of the commodity in the international market.
The oil marketer is seeking to join a list of oil marketers eyeing a pie of growing demand for the commodity across Kenya and the larger East African region.
There has been a rise in demand for LPG in Kenya with data from the Kenya National Bureau of Statistics (KNBS) showing that consumption of LPG hit 182,540 tonnes in the year December 2021, up from 167,200 tonnes a year earlier.
The major oil marketers including Rubis Energy Kenya and TotalEnergies Marketing Kenya dominate the LPG business which requires substantial investment in infrastructure and equipment.