Oil export companies now pay more to use Pipeline facilities

(Photo: Courtesy)

Oil companies will now pay more to store export oil products at the Kenya Pipeline Company’s facilities.

This follows the scrapping of a discounted tariff that was introduced last year.

Kenya Pipeline had beginning in April, last year, reduced by 30 per cent the cost of storing products on its depots in Western Kenya.

The move was expected to play a part in luring back oil marketing companies mostly operating in Rwanda and Burundi to use Kenya as an import route for their petroleum.

Firms in the two countries and some in parts of Uganda had shifted preference to Tanzania as an import route. The pipeline company said the tariff was a promotional one and has had the impact of increasing the amount of product being moved using its facilities by 20 per cent.

“The promotional tariff was one of the strategies employed to capture the market and has resulted in 20 per cent increase in exports,” said KPC. “There are other long term strategies that include investing more in new infrastructure and improving current facilities.”

Western Kenya

Oil marketing companies have been paying $41.55 per 1,000 litres. This will go up to $59.32 per 1,000 litres, which were the earlier charges.

Some of the countries that traditionally use Kenya as an import route have in the recent past started considering using the Tanzanian route.

Countries such as Rwanda, Burundi and Democratic Republic of Congo have raised concerns on challenges encountered when bringing in their goods through Kenya.

Among the long term measures that KPC has put in place to get importers to return include the commissioning of the new Sinendet-Kisumu pipeline (Line 6), which has enhanced petroleum product availability in the Western Kenya and the export market of Uganda, Eastern DRC, Rwanda, Burundi and Northern Tanzania.

The company is also building a jetty – a facility for vessels to load and unload products – on Lake Victoria, which is expected to improve movement of petroleum products using the lake.