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Kenya's new Sh40bn oil terminal nears completion

Currently at 96% ready, it will increase tankers' handling capacity.

In Summary

•Kenya Pipeline to take over operations at the large facility which is expected to help reduce the cost of fuel.

•The project which began in February 2019 with a completion date of August this year was slightly slowed down by the pandemic which struck in March last year.

Construction of the Sh40 billion new Kipevu Oil Terminal(KOT) is 96 per cent done, with the facility expected to ready for operations by end of next month.

The project which began in February 2019 with a completion date of August this year was slightly slowed down by the pandemic which struck in March last year.

China Communications Construction Company (CCCC), the executor, is expected to hand over the facility Kenya Ports Authority before the year closes.

KPA will then handover the terminal to Kenya Pipeline Company (KPC) which will operate the country's biggest oil tankers' berthing facility, that will replace the current 50-year-old Kipevu Oil Terminal.

It has the ability to hold and offload volumes from four vessels (three petroleum and one LPG) at once, hence save on the vessel waiting time.

The old terminal holds only a vessel at a time.

“The terminal is scheduled to be ready by the end of year,” KPA head of corporate affairs Bernard Osero confirmed.

Kenya Pipeline is expected to use its expertise in large fuel handling to bring the facility to full speed, with the increased capacity expected to save importers from demmurage and surcharges , hence a possible drop in the cost of importing fuel products and the final pump prices.

Demurrage is a charge payable to the owner of a chartered ship on failure to load or discharge the ship within the agreed time.

“Coming of the new KOT (Kipevu Oil Terminal) is a game changer. It will ensure the flow of fuel is consistent,” Kenya Pipeline management said.

The chines firm has already laid down four sub-sea pipelines which will be used to connect the on-water terminal to storage facilities on the land, and the KPC pipeline network that moves products to its storage facilities in the country and Oil Marketing Companies' terminals.

New KOT will have the ability to handle crude oil, heavy fuel oil and three types of white oil products(DPK-aviation fuel, AGO-Diesel and PMS-Petrol).

The upgraded modern oil terminal is expected to have a capacity to accommodate vessels of up to 200,000 DWT (dead-weight tonnage).

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 productspetrol, diesel and kerosene.

Meanwhile, Kenya Pipeline is in the process of acquiring the storage tanks at the Kenya Petroleum Refineries Limited in Mombasa, with the view of increasing the import handling capacity.

WE are on a lease agreement but the plan is to acquire KPRL to be part of KPC,” management said.

The process is expected to be completed within the next two to three months.

It also plans to invest in a Liquefied Petroleum Gas (LPG) bulk storage facility and supply, with the new KOT having a dedicated line for LPG.

The tender for the construction of the facility should be ready in the next two to three months, according to general manager infrastructure development, David Muriuki.

It is expected to help reduce the cost of cooking gas with the Energy and Petroleum Regulatory Authority (EPRA) coming in to set retail prices as it is with other oil products.

Plans are underway to import LPG on an Open Tender System, similar to the one currently used to import petroleum products.

Under the system, Oil Marketers Companies (OMCs) bid to import petroleum products that Kenya will use for a period of one month.

The winning bidder then sells the petroleum to other market players at the same price after taxes and other costs have been factored in.

Currently, the LPG is not price regulated which has seen individual companies enjoy a liberal market where prices have been rising in recent months.