Kenya Pipeline in rate cut for landlocked clients

March 23, 2017 in Business, Companies by Editor

March 24—Kenya Pipeline Company (KPC), is to unveil its new bigger pipe between Mombasa and Nairobi by mid- year and will also offer sweeteners to clients in Eastern Democratic Republic of Congo, Rwanda, South Sudan and Uganda in way of a reduction of charges.

The government through KPC, which is state-owned, has introduced a 30% discount on all transit products in all its Western Kenya depots of Kisumu and Eldoret, a move aimed at capturing more regional fuel market.

The new rate will see oil marketing companies (OMC)s now pay a promotional tariff of $41.55 per 1000 litres compared with the current $59.32. The new tariff will be effective 1st April 2017.

Cabinet Secretary, Ministry of Energy and Petroleum, Charles Keter recently approved the new tariff which is expected to reduce the cost of doing business for OMCs, a move that is likely to boost regional trade between Kenya and her neighbours.

“We have lost our market share especially in Rwanda and Burundi. We must get this rightful share back and this calls for proactive and strategic thinking. We not only want to regain the lost market, but also extend our operation into new frontiers in the region,” Joe Sang, the KPC’s Managing Director, said.

Not long ago, Sang said, “The new line once complete will adequately serve the country’s demand which is projected to be 6.8 billion litres in 2020.” With a one million litres per hour flow rate, the line will remove an average of about 700 trucks from the road daily at maximum utilization.

KPC is replacing the existing Mombasa-Nairobi pipeline that has been in operation for 38 years. Zakhem International is the main contractor on the project which was 80% complete by the beginning of this month.

The new line will enhance KPC’s pipeline devolution plan into the counties by increasing product availability in Nairobi that will feed into spur lines into Western Kenya, Central Kenya, Rift Valley and South Nyanza regions.

The new pipeline will also improve the reliability of fuel supply to the export market of Uganda, Rwanda and eastern Democratic Republic of Congo which in 2010 stood at 2.4 billion litres, but has since risen to 3.5 billion litres in 2016.

KPC has invested heavily in increasing its capacity to serve both local and export markets. One of the key investments geared towards increasing product availability in Western Kenya, was the commissioning of the Sinendet – Kisumu parallel pipeline (Line 6) in April 2016.

The Sinendet-Kisumu pipeline is a 122 kilometre 10-inch diameter pipeline parallel to an existing 6-inch diameter pipeline from Sinendet to Kisumu (Line 3) that has enhanced petroleum product availability in the Western Kenya and the export market of Uganda, Eastern DRC, Rwanda, Burundi and Northern Tanzania.