Hold your breath, cheap fuel is coming to a pump near you
As expected, there were mutterings recently when the price of super petrol crossed the Sh100 mark for the first time in two years.
That was in spite of global prices remaining fairly low for the longest time. Every month, the Energy Regulation Commission determines the price of fuel. The current discussion about fuel pricing has attracted the attention of Kenya Pipeline Company (KPC), the country’s main transporter of fuel.
That is because some experts have attributed the high pump prices to poor vessel planning, slow evacuation of fuel and storage hitches at import terminals that lead to high demurrage charges.
Much as some of these reasons may not be tackled by KPC alone, it is important to state that cheaper, safer and accessible energy for all Kenyans remains the bedrock of our growth strategy.
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It is in this light that the company developed a 10-year Strategic Plan dubbed Vision 2025 which contains our growth strategy encompassing not just the pipeline network, but also the storage facilities across the country.
Vision 2025 is a new expansion plan that will put the company on the regional map to cater for the growing demand for petroleum products. The company has mooted new projects that are geared towards harnessing resources to enhance pipeline system capacity, integrity, security, efficiency and expansion into new business lines and markets.
One of the key initiatives that KPC has initiated is the soon to be finalised acquisition of Kenya Petroleum Refineries Limited (KPRL) facility in Mombasa to boost its storage potential and drastically reduce the oil supply chain challenges that have hit the local fuel consumer hard.
Through KPC, the government intends to convert the refinery into a storage facility as the country gears up for commercial production.
The KPRL facility will grant the country and the region more storage capacity significantly bringing down the demurrage charges that run into billions of shillings annually.
Note that the demurrage charges that the oil ships accrue are finally passed on to the consumer.
On the other hand, KPC continues to invest heavily in enhancing the pipeline’s pumping capacity to increase volumes to meet rising demand for refined petroleum products.
One of the major projects that KPC is currently undertaking is the construction of a new 20-inch pipeline to replace the ageing 14-inch Mombasa-Nairobi pipeline. The new 450-km pipeline, one of the Vision 2030 flagship projects, is expected to meet demand for petroleum products until the year 2044.
Kenya’s demand for petroleum stood at 5.7 billion litres in 2016 up from 4 billion litres in 2013. The country’s demand is projected to be 6.8 billion litres in 2020. Regionally, the combined demand for Rwanda, Uganda, Burundi, Eastern DRC, South Sudan and northern Tanzania in 2010 stood at 2.4 billion litres but in 2016, it was 3.5 billion litres.
The new line is also expected to improve the safety, reliability and efficient delivery of product to KPC’s customers and reduce the constraint on storage space on the current 14” Mombasa-Nairobi pipeline. The line will remove about 700 trucks from the road daily, saving the government billions of shillings that is spent annually on road maintenance.
The new 10-inch 122-km pipeline from Sinendet in Nakuru County to Kisumu, which also serves the export market of Uganda, Eastern DRC, Rwanda, Burundi, and Northern Tanzania, has made it possible for the company to invest in a new project, the Kisumu Oil Jetty whose construction commenced this month to facilitate safe transportation of petroleum products through Lake Victoria to the neighbouring countries.
The Jetty is expected to boost storage in Kisumu by 1 million litres a year in phase 1 and up to 3 million litres per year by 2028.
It has the potential to turn Kisumu into a focal point of oil and gas commerce in the region and one of the busiest inland ports in Africa.
The four additional tanks each with a gross capacity of 33 million litres will provide sufficient capacity for receipt of higher volumes of product expected once the Mombasa–Nairobi pipeline is replaced.
Once fully implemented, the above initiatives are expected to have huge economic benefits to Kenya and the region. The projects will infuse more efficiency and innovation in fuel supply logistics, lower the cost of fuel and spur socio-economic growth.
