•It is expected to help deal away with demurrage charges currently incurred as a result of the low capacity to handle oil tankers.
•The new facility will handle four vessels at a time as opposed to the old terminal which handles one vessel at a time.
Image: HANDOUT
Construction of Kenya's Sh39 billion new oil terminal is 80 per cent complete, Kenya Ports Authority has said, and should be ready by December.
The terminal being developed at the Mombasa port is expected to help cut fuel prices.
According to the Energy and Petroleum Regulatory Authority (EPRA), it will do away with demurrage charges currently imposed as a result of delays on oil tankers.
The country has for decades depended on the old Kipevu Oil Terminal and the Shimanzi terminal near the Likoni Ferry channel to offload oil products. The two can only handle one oil tanker at a time.
The new and modern oil facility will accommodate up to four vessels at a time with much bigger tonnage.
It will handle vessels of up to 170,000-deadweight tonnage compared to one ship of 110,000 deadweight tonnage on the existing oil terminal, improving on capacity and efficiency on handling fuel products include LPG, crude oil or heavy fuel, aviation fuel, diesel and petrol.
It is designed to have five onshore pipelines, each dedicated to a separate oil product to existing Kenya Petroleum Refineries Limited (KPRL) and Kenya Pipeline Company tanks in Mombasa.
Its implementation commenced in February 2019.
Construction however derailed on the onset of the Covid-19 pandemic, last year, KPA acting managing director Rashid Salim told the Star.
“Delivery of material used in the construction was affected and the site was closed for several weeks when the pandemic struck. We are however making progress and at 78.9 per cent complete. It will finished by end of this year,” said Salim.
It was supposed to have been completed by October, according to Salim, but it will drag to December.
Energy sector regulator (EPRA) expects the increased capacity to evacuate fuel and berth larger vessels will help freight charges, with KPA noting it will also help deal away with demurrage charges currently charged on waiters (waiting ships).
Demurrage is a charge payable to the owner of a chartered ship on failure to load or discharge the ship within the agreed time.
With speedy cargo evacuation, the country will save on demurrage costs to the tune of Sh0.50 per litre per month for each of the three price regulated petroleum products, according to EPRA.
“There will be no any demurrage or standby charges that we normally have when ships have to wait before being handled. The cost is passed on to consumers affecting fuel prices. We expect this to end,” said Salim.
The country will also enjoy economies of scale from use of bigger vessels.
The project is fully financed by KPA and once complete, it will meet the increasing needs of fuel in the country and neighbouring country.
On average, Kenya consumes 213 million litres of diesel, 150 million litres of petrol and 39 million litres of kerosene, per month, according to the Petroleum Institute of East Africa.
Meanwhile, EPRA is banking on increased fuel storage capacity by both the government and the private sector to accommodate more products, for longer periods, a move that will help manage prices based on international crude prices.
Kenya Pipeline has been keen to increase the import handling capacity after taking over the storage tanks at the defunct Kenya Petroleum Refineries Limited in Mombasa.
There are also private petroleum storage facilities, which serve to boost the import and distribution capacity.