May 26, 2022

Mawazo Writing Africa

Writing about the main

Kenya seeks to regain fuel business from Dar with its new reserve in Mombasa

Kenya is banking on the new $385 million Kipevu Oil Terminal to rip oil business out of the port of Dar es Salaam, which supplies the Great Lakes region.

Tanzania has turned the tables the port of Mombasa after persistent allegations of adulteration of petroleum products on the North Corridor. Then the three-year closure of the Uganda-Rwanda border and lower tariffs made both countries more dependent on the Tanzanian port.

Now, Nairobi plans to create a petroleum products hub for the region with the new facility in Kipevu, in hopes to win back their lost business. The government has also started to convert Kenya Petroleum Refineries Ltd’s (KPRL) Changamwe Depot in Mombasa, a few kilometers from Kipevu, into a fuel and LPG storage facility.

Kenya Petroleum Principal Secretary Andrew Kamau The EastAfrican said that procedures are nearing completion for the Kenya Pipeline Company (KPC) to acquire KPRL to make the facility a hub for larger ships.

< p>Mr. Kamau said the Kipevu Oil Terminal (KOT) will serve as an import and export facility.

“We will use this new facility as it has loading and unloading mechanisms where larger vessels can unload fuel and stored at the KPRL depot and then pumped back to smaller vessels that can supply Indian Ocean islands such as Zanzibar, Seychelles, Mauritius and other countries that lack such a facility,” said Mr. Kamau.

“The construction of KOT and its p peripheral facilities to provide cheap gas and other petroleum products to Kenya and to ensure that such products are constantly available on the East African islands and other Indian Ocean islands,” he added Lure back key users of Mombasa Port for transit cargo to start importing fuel from Kenya via the Northern Corridor to Kisumu and then via the $170 million new Kisumu fuel terminal through Lake Victoria.

Uganda imports at least 185 million liters of petroleum products monthly, most of which are routed via the Kisumu Port and Eldoret Depot. Kenya transports about 900 million liters of petroleum products per month and relies on Tanzania’s inadequate fuel transportation infrastructure to sustain Uganda’s petroleum handling business.

Last year Uganda said it was exploring options to reduce its dependence on Kenya for petroleum imports by increasing supplies through Tanzania, a move that unsettled Mombasa port managers and government officials.

Currently, Kampala accounts for three quarters of the Port of Mombasa’s transit cargo and any drop in shipments could mean this further harmed the facility, which has attempted to fend off growing competition from Tanzania’s Indian Ocean ports of Dar and Tanga.

In July, Uganda Railways Corporation (URC) began a trial shipment of 500,000 liters of petroleum products from Mwanza, after a 16-year hiatus the Lake Victoria. The cargo from the port of Dar was transported to the port of Mwanza by train.

It takes four days to transport the cargo from the port of Dar es Salaam to Port Bell in Uganda by road and rail.

< p>URC acting chief executive Stephen Wakasenza said that while Kampala is happy with the use of Mombasa, it was looking for an alternative route “for strategic reasons”.

“We are targeting oil because it is a daily use product. We aim to bring in 10 to 20 million liters per month on both routes and increase the capacity to 40 million liters,” Mr Wakasenza said, adding that they will be relying on a Kenyan boat to deliver around four to six million liters per month .

Kenya says now that the storage facilities in Mombasa and Nairobi are connected to the old metre-gauge railway network, it will use freight trains to transport petroleum products, especially now that the KOT requires docking of at least four ships at the same time.

“We understand the challenge ahead in terms of storage, that is, when a freight train arrives to evacuate such products, to avoid delays in unloading,” said PS Kamau.

Mr. Kamau acknowledged that the originally planned Eldoret-Kampala-Kigali Refined Petroleum Products Pipeline, one of the key projects that Uganda, Kenya and Rwanda will jointly develop in the Rah members of the Northern Corridor Integration Projects, called the Coalition of the Willing, had been “abandoned unless fresh talks are initiated”, hence the new plan.

The pipeline should be 1.5 billion US dollars, with the 350 km Eldoret-Kampala line estimated to cost US$400 million and the 434 km Kampala-Kigali belt estimated to cost US$1.1 billion.

The Project would include the construction of the main line pumps, intermediate pumping stations and road or rail loading facilities for tankers. The initial design requirement would also have allowed for bi-directional flow with the installation of pumping stations to ship product from the proposed Hoima refinery in Uganda via Kampala to Kenya with another option to feed the Kampala-Kigali pipeline.

But now Kenya wants to double capacity to handle transit petroleum products from the current 35,000 tons per month, enticing Uganda, Rwanda, Burundi and the Democratic Republic of the Congo to consider Mombasa as their main source of oil, as it will be cheaper than the use of Dar’s Central Corridor.

According to the Kenya Ports Authority (KPA), the old oil facility recorded a total bulk liquid throughput of 8.63 million tonnes in 2021, compared to 8.37 million tonnes in the Year 2020.

KPA Acting Managing Director John Mwangemi said that faster shipments are likely to result in lower prices for LPG as oil marketing companies are expected to pass on the benefits of reduced demurrage to consumers.

The new K Ipevu Oil Terminal, built by China Communications Construction Company, will be served by both subsea and land-based Pipelines will be connected to the deposits and can process five different fuel products: crude oil, heavy oil and three types of white oil products (DPK aviation fuel, AGO diesel and PMS fuel).

The facility will be located directly opposite the second container terminal will be built in Mombasa Port and will have a capacity to handle 200,000 DWT vessels and a dedicated LPG line.

The new LPG terminal will have two LPG discharge lines, using KPC in accordance with government plan will have rights to one line, while private companies will be assigned the second line.

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The second line will play a key role in the Beendi ment of the longstanding gas supply monopoly as it will allow new entrants to enter the business.

Kenya’s National Environment Management Authority (Nema) said at least 20 companies had expressed interest in the second line before construction, but only seven submitted their bids for approval.

KPC currently receives imported LPG from vessels docking at the Shimanzi Oil Terminal and fills it into its tanks – T610 and T611 located at its Changamwe facility condition . The product is then evacuated through interconnected pipelines to local terminals for truck loading/bottling.

The pipeline agency is already constructing a dedicated LPG storage facility with an initial capacity of 25,000 tons to be planned in the future is playing a key role in reducing gas costs by 30 percent once the plant is up and running.