Importation, storage and marketing of Liquified Petroleum Gas (LPG) in Kenya is poised for a major shift with the construction of a greenfield terminal in Mombasa.
Global lender– World Bank through its development arm, International Finance Corporation (IFC) has approved a $23 (2.5 billion) funding for the project by Mombasa Gas Terminal, a company specialising in LPG handling.
The funds will go towards the construction of the first phase of an LPG import and storage terminal that will enable a sustained increase in the uptake of clean energy fuels in Kenya.
This, as the government remains keen on ensuring the country ditches harmful energy sources such as charcoal and firewood, commonly used by households for cooking.
The funding comes after the company secured regulatory approvals from the national and county governments.
The project site is located at Mbaraki Creek within proximity to the Port of Mombasa.
In its disclosure, IFC says the $23 million project will be financed by an initial loan of $5 million (Sh53.9 million) and $10 million (Sh107.8 million) in additional debt arranged by IFC.
The balance of $8 million (Sh862.7 million ) is equity contribution from the sponsor with IFC noting that:“the aim of the project is to address issues of LPG supply and infrastructure in the Port of Mombasa to support the LPG master plan for Kenya”
“We confirm that we have received a facility from the World Bank for Phase One of our bulk LPG import and storage terminal,” Mombasa Gas Terminal (MGT) Managing Director Julius Riungu said, “We are aiming to complete construction of phase one and begin operations within six months.”
The second phase will complete the storage capacity to 22,000 metric tonnes or more with an annual throughput capacity of 400,000 metric tonnes per annum, he said, noting that the project will underpin Kenya’s ambitious goal for sustainable economic development.
The new terminal will include direct mooring access for large-sized LPG carriers, storage, and associated infrastructure that will have multiple loading points for the transfer of LPG to road and rail transport.
Several global LPG market players are in discussion to participate in long-term partnership with the project, management has confirmed.
According to Riungu, the facility will serve both industrial and domestic users through dealer networks and will support the government’s Big Four agenda by powering manufacturing, enhancing food security, improving healthcare and complimenting affordable housing efforts through reticulated gas systems.
The project is aligned to Kenya’s target of achieving universal access to modern cooking solutions by 2030 in line with the Sustainable Development Goal number 7 (SDG 7), he said.
These solutions include LPG, electricity, biogas, bioethanol and improved solid fuel cook-stoves.
A recent study published by the Ministry of Energy ( 2019) shows that 93.2 per cent of the rural population still rely on solid fuels as their primary fuel source.
The study also shows that households using LPG as the primary fuel still use, on average, 42 per cent of the amount of charcoal used by households that depend on charcoal as the primary fuel.
The increased use of clean fuels is designed to support the move by the government to restore Kenya’s forest cover to 10 per cent up from the current seven by directly reducing the demand for charcoal and firewood as the primary sources of energy, especially at household levels.
Government and market data shows that the current LPG market in Kenya is over 300,000 metric tonnes per year and the estimated potential market in the East Africa could be well over 1,000,000 metric tonnes by 2027, as infrastructure constraints are removed and LPG becomes an affordable and accessible fuel to a larger population.
“We embarked on the Mombasa Gas Terminal project to reduce supply constraints and improve the affordability and accessibility of clean fuel usage in the country for both industry and households,” Riungu said.
He added that the disease burden attributable to household air pollution is high and the company's aim is to become part of the solution, by enabling and promoting LPG supply and uptake in the country.
“We at MGT are very excited at the possibilities that we will create an opportunity for our fellow Kenyans to improve the quality of their environment and their health.” said Riungu.
