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    Kenya: Bid to Make Kenya Regional Oil Hub


    opinion

    Kenya Pipeline Company (KPC) is undertaking some major infrastructural projects in a plan to consolidate its position as a market leader in oil and gas commerce in the East African region.

    One of the projects that is expected to reshape the region's oil sector is the Kisumu Oil Jetty.

    The construction of the Sh1.7 billion oil jetty began this month and will take half-a-year to complete.

    PETROLEUM MARKET

    The regional oil infrastructure project, which is being undertaken by a Kenyan firm, Southern Engineering Company, is expected to boost efforts to turn Kenya into the region's petroleum hub.

    The oil jetty's target market will create an integrated marine fuel transportation, making it more efficient and commercially viable to reduce transportation costs for the oil marketing companies.

    The jetty's primary market will be around the lake region and expanding the petroleum export market into neighbouring Uganda, Rwanda, Burundi and the mines in northern Tanzania.

    NEW PIPELINE

    The project is also expected to increase throughput in Kisumu by a billion litres a year in the first phase and up to three billion litres a year by 2028.

    It has been made possible following the completion of the new Sinendet-Kisumu oil pipeline in April last year.

    The new pipeline has enhanced the availability of oil products in western Kenya and the export markets of Uganda, eastern Democratic Republic of Congo, Rwanda, Burundi and northern Tanzania.

    The line has increased product flow to the Kisumu depot to 350,000 litres an hour from 110,000 litres an hour, increasing the country's competitive edge in the region.

    BOOST TO AGRICULTURE

    The additional product has enhanced the optimisation of tank utilisation in Kisumu, which had stood at only 30 per cent for many years.

    The full tank capacity for the port town is 39 million litres.

    This is enough to meet the annual demand for petroleum products in western Kenya, which stands at 1.1 billion litres, whereas the regional demand is some 3.3 billion litres.

    This security of supply has powered businesses and boosted agricultural production, improving the people's lives.

    STORAGE SPACE

    In Eldoret, KPC is also constructing additional loading arms to cope with the rising demand for petroleum product uplifts at the depot, which serves western Kenya region and the neighbouring countries, including South Sudan.

    The project will enhance the existing facilities to meet the anticipated increase in product uplifts by up to 2 million litres a day, achieving the full benefits of the Nairobi-Eldoret parallel line.

    The project entails installation of two bottom loading facilities with three arms each to load diesel, super petrol, and kerosene to increase the service delivery efficiency.

    Once completed in a month's time, the loading arms will enhance flexibility, creating more storage space in Eldoret to feed western Kenya and the neighbouring countries.

    DEVOLUTION PLAN

    The construction of the Mombasa-Nairobi pipeline will enhance KPC's pipeline devolution plan into the counties by increasing product availability in Nairobi that will feed into spur lines into western and central Kenya, Rift Valley and southern Nyanza.

    The new pipeline will also help to improve the reliability of fuel supply to Uganda, Rwanda and eastern Congo.

    The line is expected to improve the safety, reliability and efficient delivery of petroleum products to KPC's customers and reduce the constraints on storage space on the current 14-inch Mombasa-Nairobi pipeline.

    In the past few years, Kenya has lost its regional market share to Tanzania, mainly due to the unavailability of petroleum products in the western region.

    PROMOTIONAL TARIFF

    Increased availability of these projects should enable Kenya to regain its market share, especially in Uganda, Rwanda and Burundi.

    It is in this light that KPC recently introduced a 30 per cent discount on all transit products in the western Kenya depots of Kisumu and Eldoret in a move aimed at capturing more of the regional fuel market.

    The new rate has seen oil marketing firms pay a promotional tariff of Sh4,155 per 1,000 litres from Sh5,932 per 1,000 litres.

    The KPC will in the coming years continue to invest heavily in increasing its capacity to serve both the local and export markets to position Kenya as a leading petroleum logistics hub in Africa.

    Mr Sang is the managing director, Kenya Pipeline Company

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