Kenya Pipeline Company (KPC) has concluded the takeover of the defunct State-owned Kenya Petroleum Refineries Limited(KPRL) which has failed to live to its status as East Africa’s only oil refinery.
This is the second time the facility is exchanging hands in the past eight years after Shell and the British Petroleum Company BP sold it to Indian investor Essar Energy Overseas Limited in 2016.
Essar Limited, which failed to revive the facility, relinquished its shares to the government after it failed to run it, just six months after acquiring it at a cost of $5 million.
Kenya Energy Permanent Secretary Andrew Kamau said the takeover coincides with the operationalisation of the New Kipevu Oil Terminal (KOT) which started a dry run this week at the port of Mombasa.
Experts maintain that the acquisition of the refinery by KPC will significantly cut on perennial inefficiencies that characterise the petroleum products supply chain, which translate into high prices at the pump.
The increased storage capacity at KPC will also save oil marketing firms millions paid to shipping firms as demurrage charges.
Mr Kamau said the acquisition 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.
“This week will start a dry run of the new KOT and it will improve the time of ships docking to discharge fuel which will reduce demurrage cost resulting to low petroleum products prices,” said Mr Kamau at the Port of Mombasa.
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.
Kenya is also using the newly constructed $170 million fuel jetty in Kisumu to woo Uganda, which is its main transit market, to start importing fuel from Mombasa.
Uganda receives over 185 million litres of petroleum products, mostly channeled through the Kisumu port and the Eldoret depot.
Kenya transports about 900 million litres of petroleum products per month and is banking on Tanzania’s inadequate fuel transport infrastructure to retain the Ugandan petroleum transshipment business.
But with the new KOT facility, Kenya seeks also to double the capacity of handling transit petroleum products from the current 35,000 tonnes and entice Uganda, Rwanda and Burundi to start due considering Mombasa as their petroleum products source since it will be cheaper than Dar es Salaam.
The facility has terminals consisting of four berths capable of berthing four vessels to benefit from economies of scale and reduce fees charged for waiting vessels compared to the current one which only handles two vessels at a time.
KPRL has 45 tanks with a total storage capacity of 484 million litres out of which 254 million litres is reserved for refined products while the remaining 233 million litres is reserved for crude oil.