CLEAN ENERGY

Cash crunch halts Kenya Pipeline’s Eldoret LPG depot

That project has been put on hold until 2025 as Kenya Pipeline cuts spending on new projects.

In Summary
  • Budgetary constrains have pushed KPC to freeze “non-priority” projects in the current financial year (2019/20).
  • Delays in implementing LPG projects is hurting efforts to increase use of cooking gas by households, which is aimed at reducing respiratory diseases and deaths.

A planned 5,000 metric tonnes Liquefied Petroleum Gas (LPG) distribution and filling depot in Eldoret has stalled backtracking government efforts to increase the use of safe energy in the country.

Kenya Pipeline Company (KPC) has been forced to shelve the construction plans which now adds to stalled projects at the parastatal, which has slashed its capital expenditure budget by Sh6 billion.

Budgetary constraints have pushed KPC to freeze “non-priority” projects in the current financial year (2019/20).

 

Kenya Pipeline had in 2017 identified a 5–acre piece of land adjacent to its Eldoret depot for the LPG plant which was to be developed in partnership with Total.

According to management at the Eldoret depot, the project was first put on hold to pave way for completion of the new Sh48 billion–450km Mombasa-Nairobi Pipeline which was operationalised in July last year.

The LPG plant is however yet to get funding despite completion of the new pipeline, also known as Line 5, raising questions over government’s commitment to increase LPG use in the country especially in rural areas.

 It is also said to be frustrating KPC which is keen to diversify its business from petroleum products which has gotten increased competition in the export markets mainly Uganda, where Tanzania continues to eat into Kenya’s market share.

“That project (LPG depot) has been put on hold until later. It will come maybe in 2025,” Eldoret deport manager Anthony Sang told the Star on telephone yesterday.

KPC is keen to put up LPG or simply cooking gas depots in Mombasa and Eldoret to help ease distribution and increase the use of the commodity by households, which will support the government’s efforts to reduce over reliance of kerosene, charcoal and wood by poor households.

The company is currently in the process of improving the Kenya Petroleum Refineries Limited (KPRL) LPG storage facility in Mombasa, which has a 1,200 metric tonne capacity.

 

According to acting managing director Hudson Adhambi, many LPG dealers do not have loading facilities for trucks, hence rely on few facilities owned by major oil marketing companies which also have limited capacities.

“KPC has a proposal to have an LPG truck loading facility in the interim to tap into the potential for LPG business and provide the dealers with facility to load from Mombasa effectively reducing the cost of transportation,” Adhambi said.

KPC is planning to increase LPG storage capacity in Mombasa to 50,000 metric tonnes in the near future. The Eldoret facility is expected to serve the North Rift, Western regions and exports markets of Uganda, Rwanda, Burundi, DR Cong and parts of South Sudan.

“The facilities will ensure that the country enjoys economies of scale and competitive pricing for LPG,” said Adhambi.

With the proposed storage facilities, KPC is hoping the government will implement an open tender system (OTS) for LPG similar to that of petroleum products, thereby controlling the price of gas.

“We remain committed to LPG. We are looking to start with a receiver facility in Mombasa. Eldoret will come later,” KPC chairman John Ngumi told the Star.

The new Kipevu Oil Terminal (KOT) which is incorporates LPG facilities is expected to increase handling capacity at the port of Mombasa.

Increased LPG is expected to help address the rising cases of respiratory diseases .

According to Petroleum Institute of East Africa(PIEA) general manager Wanjiku Manyara, approximately 21,500 deaths occur annually due to respiratory diseases, with 40 per cent of Kenya’s health burden caused largely by indoor pollution due to cooking with firewood, charcoal and kerosene, a preventable health burden.