Mombasa leaders oppose oil refinery takeover by KPC

Some Mombasa leaders have reservations about the acquisition of Kenya Petroleum Refinery Limited by Kenya Pipeline Company.

The Star has learnt that Changamwe MP Omar Mwinyi, where the refinery is located, Kisauni’s Rashid Bedzimba and Mombasa Senator Mohamed Faki, are opposed to the takeover.

Instead, they want the government to pump in about Sh7 billion that is required to revive the refinery and upgrade the systems in it to make KPRL more efficient.

On Wednesday, Energy CS Davis Chirchir announced that the acquisition will be by transfer of shares as opposed to transfer of business, a model advised by Price Waterhouse Coopers, an audit firm contracted to study and advise all the best takeover options.

The Cabinet had approved the takeover on July 18.

Speaking at a press conference at Mombasa Governor Abdulswamad Nassir’s office, Chirchir allayed fears that the acquisition of the KPRL by KPC will lead to job losses for any staff of the two parastatals.

Chirchir said instead, there will be more job opportunities for the people of Mombasa, where the refinery’s 370-acre land is located strategically, close to the sea.

“Nobody is losing any job. We had PWC doing a study to confirm which is the best acquisition option and we’ve zeroed in the acquisition by transfer of shares as opposed to transfer of business which would have had many challenges,” Chirchir said.

The refinery closed down in 2014 due to challenges of yield shift, with the product being refined not matching planned output, thus not making any profit.

Chirchir said KPRL is a prime asset that should be put to good use.

KPC, according to the CS, has a strong balance sheet of Sh150 billion which will revive activities at the defunct KPRL.

But Omar, Bedzimba, Faki and Changamwe MCA Bernard Ogutu said the acquisition of KPRL by KPC is in bad faith.

The Mombasa politicians, CS Chirchir, Governor Nassir, and MCA Fadhili Makarani (Port Reitz) were in a meeting at the county chief's office that took almost five hours over the matter.

When they emerged to address the press, Mwinyi, Bedzimba, Faki and Ogutu did not show up for the press conference, signalling a disagreement.

Speaking to the Star on the phone, Mwinyi said they went to the meeting to listen to what CS Chirchir had to say.

“We have reservations. We are waiting for the documents the CS said he will avail to us to explain more about what is going on,” Mwinyi said.

The Changamwe MP said the refinery was doing well before government functionaries developed an interest in the oil business and worked to kill the refinery so their businesses could grow.

“At that time, we were told KPRL required Sh5 billion for an upgrade and an investor was brought in on condition they will upgrade it. However, the investor milked it dry before running away. We were left alone,” Omar said.

“The best thing would have been to commission an independent research to determine the best way the facility can be used.”

The Changamwe legislator said PWC would only have been biased towards the government, which contracted them in the first place.

“Whoever pays the piper calls the tune,” he said.

He said he failed to understand why the government chose to keep quiet for all those years amidst their calls to upgrade the facility.

“By the time they decided to acquire the KPRL, it means they had an intention in future to take loans using the assets of KPRL as security. Why don’t they allow KPRL themselves to take a loan and do the upgrade they need?” Mwinyi posed.

He said the government should have leased the facility instead of taking it over.

“They are hellbent on doing what they want to do whether we like it or not. They want to set us up with staged public participation as a by the way,” the MP said.

“Meanwhile, we are looking at other openings that are available to us then we will make a decision. Joining them at the press conference would have made us look like we are party to the process.” 

MCA Ogutu said as representatives of the people, they were never involved in the decision-making process from the beginning.

“Calling us today was to try to make us rubber stamp their decisions and that does not sit right with us,” he noted.

He said since their decisions had not been sorted from the onset, any decision they make now will not count.

“The way they started it, let them continue with it,” Ogutu said.

The essence of public participation, he noted, is for all involved to be heard.

CS Chirchir said KPC will still have to make a decision on which business model to adopt after taking over the KPRL facility.

“They will tell us whether they will go the refinery way, whether storage or bring other investors because an asset of 370 acres is such a big asset,” Chirchir said.

He said the national government will work with the Mombasa County government to revamp the KPRL assets.

The KPRL has 45 storage tanks, which have a capacity of 484 million litres, 254 million of which are designated for refined goods and the remaining 233 million litres for crude oil.

With the acquisition, Kenya will have infinite storage room for petroleum products, utilising the new Kipevu Oil Terminal 2.

Kenya, with its strategic location, hopes to double the capacity of handling transit petroleum products from 35,000 tonnes to attract Uganda, Rwanda, and Burundi to begin using Mombasa as their petroleum product supplier since it will be cheaper than Dar es Salaam.

Governor Nassir said Mombasa people should benefit from the rejuvenation of the KPRL facility when the master plan is ready.

“The people of Mombasa should also benefit from the CSR (Corporate Social Responsibility) that KPC will undertake,” Nassir said.

Already, the county has worked with KPC to refurbish the Port Reitz Hospital but Nassir said more has to be done for the hospital.

At the same time, the county will give written delegated powers to the engineers at KPC to enable them to remove bottlenecks when it comes to urban planning.

This will enable the county to synchronise its urban planning for the whole county with the KPC plans when setting up oil pipelines, water pipelines and other necessary infrastructure.

“It has been a nightmare in the past. When we were doing Kibarani, there was a problem. The road took so long because no one knew what should pass where," Nassir said.

“So, as the custodian of urban planning, we will be in charge of that.” 

The governor said the new master plan for the KPRL which will now be under KPC will include social amenities like schools and hospitals built on the 370 acres of land which the refinery sits on and which will be redesigned.

After the meeting, the CS and his team went to talk to the KPRL staff to assure them they were in safe hands.

The KPRL staff have been working with the KPC staff through a lease agreement where the KPC was using the KPRL tanks, which were rehabilitated.

Chirchir said the government wants to accelerate the use of Liquefied Petroleum Gas (LPG) as a transitional fuel to mitigate the challenges of climate change by reducing the use of wood fuel.

Kenya will host the Africa Climate Change Summit in Nairobi next week where more than 30 heads of state from Africa and beyond have confirmed participation.