Refinery cannot meet region’s demand, PIC told

By ALPHONCE SHIUNDU

Kenya: The country’s oil refinery is old and cannot satisfy the petroleum needs of the East Africa region, the Government’s sole oil marketer told MPs Thursday.

Speaking when he appeared before the Public Investments Committee in Nairobi’s County Hall, National Oil Corporation of Kenya Chief Executive Sumaiya Athman said the refinery in Changamwe, Mombasa, was also too small for the market needs of the country.

Sumaiya was categorical that the cost of upgrading the refinery was almost equal to the cost of building a new one.

The refinery in Mombasa, run by the Kenya Petroleum Refinery Limited, has been dogged by capacity problems, and marketers have been complaining that the prices are higher compared to the prices of importing already refined products from oil producing countries in the Middle East and North Africa.

The industry players have been complaining that the refinery is inefficient and that the sulphur content in the refined products was wanting.

The inefficiency had resulted in oil tankers having to pay huge amounts in demurrage costs, sometimes up to $25,000 (Sh2.15 million) per day.

“We know our oil is very sweet in terms of sulphur content, but it is very waxy, therefore to deal with it, you need a fairly enhanced refinery,” the Nock boss told the PIC team led by the chairman, Aden Keynan.

The National Oil boss appeared to back a new facility altogether, but warned that the Government should know that there are “super refineries, major refineries, huge refineries” out there with a capacity of “over a million barrels a day” which might pose stiff competition if refined products from Kenya’s refinery are expensive.

“If you put up a new facility and you’re not able to compete, very few people would want to use your facility. If we are not careful (with the specifications), we can easily put up a facility that’s more expensive (to run),” said Sumaiya.