The Kenya Pipeline Company (KPC) is set to construct a cooking gas storage facility at the Kenya Petroleum Refineries Ltd (KPRL). The move is expected to ease the importation of Liquefied Petroleum Gas (LPG) into the country, increasing competition among oil marketers and, in turn, bringing down the cost of the fuel.
The facility is also expected to enable players to import cooking gas through the Open Tender System (OTS), a fuel importation mechanism supervised by the Petroleum Ministry that contracts oil firms with the lowest bids to import petroleum products on behalf of the industry. The bulk storage facility, to be owned by the government, could also usher in an era of price controls for cooking gas.
KPC has started the search for a company that it said would provide engineering designs for the proposed facility, which will inform the process of selecting a contractor for the construction works.
The consultant will also undertake environmental impact assessment as well as LPG demand in the Kenyan market. “The proposed new facility is to be designed as a ‘common user’ facility for dispensing LPG to interested parties through rail siding, truck loading, and bottling facilities,” said KPC in tender documents.
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“KPC is desirous of implementing storage capacity of at least 25,000 metric tonnes in the medium term and 50,000 metric tonnes in the long term subject to confirmation after undertaking the LPG demand study.” The facility at KPRL, which KPC runs through a lease, will be linked to the second Kipevu Oil Terminal (KOT 2), which is nearing completion.
In 2005, a study jointly conducted by the Ministry of Energy and The World Bank recommended that LPG storage facilities with total capacities of 8700 tonnes be set up in the three cities including Nairobi, Mombasa and Kisumu, and the two major towns of Eldoret and Nakuru.
Meanwhile, KPC is seeking a transaction adviser to help it conclude the takeover of the defunct KPRL as it seeks to boost its storage capacity. KPRL was placed under the management of KPC in 2017 as a storage facility for imported crude oil after Indian investor Essar failed to revive the country’s only oil refinery.
KPRL has 45 tanks with a total storage capacity of 484 million litres. About 254 million litres is reserved for refined products while 233 million litres is for crude oil.
