KPC to lease private oil storage facilities in Nairobi, Mombasa
The 20-inch 450-kilometre Kenya Pipeline Company’s pipeline under construction at Kokotoni in Mombasa in July. KPC has sent its insurers to an oil spill site in Kibwezi, signalling the State firm’s intention to compensate residents for damage. PHOTO | FILE
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Investors and marketers are currently deprived of reliable storage to suit their demands to service East Africa and its hinterland.
The Kenya Pipeline Company (KPC) plans to lease oil storage facilities from private investors in Nairobi and Mombasa in a bid to improve product distribution and supply.
The KPC said it targets to lease already operational terminals in Nairobi and Mombasa with a capacity of 30 million litres and 100 million litres, respectively.
“The terminal must be fit for purpose for immediate use,” the company said as it called for bids by interested terminal owners.
Several private firms such as Vivo, KenolKobil, Hashi Ampex, Petrocity, Gapco and Total Kenya have petroleum depots and terminals in Nairobi and Mombasa.
Investors and marketers are currently deprived of reliable storage to suit their demands to service East Africa and its hinterland.
Extra storage is critical to oil marketers in the region because of thin profit margins from sales. In fragmented markets such as East Africa’s, bulk supplies hold the key to profitability.
The government in September last year took over the management of a private oil terminal in Kipevu, Mombasa, raising hopes of lower storage penalties for oil marketers, which will ultimately lower product prices.
The KPC now runs the facility owned by international storage logistics firm VTTI under a five-year lease deal. The newly leased facility provides an alternative to the strained national storage tanks at the State-owned Kipevu Oil Storage Facility, which have been blamed for high demurrage charges.
Oil marketers have been paying penalties for delays occasioned by tankers failing to offload due to a lack of adequate storage.
VTTI bought out the 111-million litre facility as an incomplete asset from the troubled Triton Limited.
But oil majors had been hesitant to use it since it is majority owned by Vitol, which has significant stake in Kenya Shell.
The terminal is linked to the KPC’s main line from Mombasa to Nairobi, which allows products to be pumped from the coastal town to Nairobi, Eldoret and Kisumu.
Besides leasing storage facilities, the KPC targets to more than double the capacity of its Nairobi fuel terminal to cater for extra petroleum products when a new pipeline from Mombasa becomes operational in 2016.
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