Kenya Pipeline Company (KPC) is losing an estimated Sh600 million annually to fuel theft along its network from the Mombasa port, highlighting the impact of the vice on its profitability.
Disclosures by the National Assembly Committee on Energy show that KPC loses 0.04 percent of the fuel throughput annually or 3.2 million litres. This is, however, lower than the 0.25 percent rate of loss the energy regulator allows.
The company has grappled with cases of fuel siphoning and leakages along the new 450-kilometre pipeline that was commissioned in 2018 amid calls by MPs to have a leak detection and surveillance system installed.
KPC posted a net profit of Sh4.16 billion in the year that ended June 2023 as throughput volumes along its pipeline jumped six percent to 8.67 billion litres from 8.18 billion litres metres the year before.
“Kenya Pipeline Company is losing throughput products of 0.04 percent against a threshold of 0.25 percent set by the Energy and Petroleum Regulatory Authority (Epra) through theft,” the committee noted.
“Considering that Kenya Pipeline transports about eight billion litres annually, the 0.04 percent translates to around 3.2 million litres lost and approximately Sh600 million in revenue lost.”
The fuel losses through the KPC line are passed on to consumers.
KPC collects Sh0.16 for every litre of diesel and petrol and Sh0.15 for kerosene sold to cover the pipeline losses, according to the monthly fuel pricing schedule that ends on February 14.
Oil marketers, who rely on KPC’s pipeline to transport their oil products from the Mombasa port to the rest of Kenya and neighbouring countries, have in the past raised concerns over the fuel losses.
Through their secretariat, Supplycor Kenya Limited, the marketers flagged unexplained fuel losses along the KPC network and called on the Energy ministry and KPC management to intervene and stem the losses.
KPC’s current installed system consists of 1,342 kilometres of pipeline with current capacity to handle about 14 billion litres of petroleum products.
The State-owned fuel storage and transport firm is currently using a Sh48 billion pipeline that was built by Lebanese firm, Zakhem International Construction.
The line was seen as more secure from vandals and leakages compared to the old pipeline that has since been decommissioned.
In 2022, KPC disclosed plans to build a new pipeline from Mombasa to Nairobi by December 2024 as the company races to meet increasing demand in the local and transit markets.
The firm has a total of five fuel depots in Mombasa, Nairobi, Nakuru, Eldoret and Kisumu for loading fuel into trucks for the local market and the neighbouring countries.
