Kenya is aiming to dominate the liquefied petroleum gas (LPG) supply by building the largest import and storage gas facility in Mombasa and licensing more private companies to compete with Tanzania, which has dominated business in the region for years.
The announcement by Kenya Pipeline Company (KPC) of building a 25,000 tonne storage facility to be linked to the Ksh 42 billion new Kipevu Oil Terminal 2 (KOT) at the Port of Mombasa comes days after Kenya banned imports of gas from Tanzania across the Namanga border.
KPC has signed a giant Pakistani company; Petrochem Engineering Services is designing an LPG import and storage facility in Changamwe, Mombasa while five private companies bid to tap into the new Kipevu Oil Terminal 2.
The Mombasa facility, once complete, will support the loading of Cooking gas will expedite distribution by trucks, which will help reduce demurrage costs.
KPC says faster loading is expected to result in 30 percent lower prices for LPG once it is operational, as oil marketing companies Passing on the benefits of reduced mooring costs to consumers.
“LPG storage capacity in Mombasa is limited and LPG ships experience enormous downtimes, which affects the retail price of bottled gas,” says KPC’s tender documents.
” KPC proposes the installation, commissioning and operation of a 500-ton LPG truck loading facility per day, which will improve product evacuation and thus free space restrictions ments and subsequently reduce demurrage costs.”
The limited LPG storage capacity in Mombasa has meant that ships stay in port longer, resulting in higher demurrage costs which are then passed on to consumers and thus paying high prices for bottled gas.
KPC currently receives imported LPG from vessels docking at Shimanzi Oil Terminal and fills it into its tanks – T610 and T611 located at their Changamwe facility will do so Product then evacuated through connecting lines for truck loading/filling to local terminals.
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The Lack of dock levelers for truck loading has been a challenge for gas companies and when completed the facility will allow companies to truck gas, which has proven to be economically viable.
Upon completion by KOT2 with a chap The ability to connect various gas suppliers will end the business, which was controlled by a few companies, from the monopoly as five companies have already applied to connect to the terminal in Mombasa Port.
According to National Environment Management Authority (Nema) and Energy Regulatory Authority (ERC), more than five companies have applied for a license to construct gas plants.
Some of the companies that have a license to tap into the submerged gas pipelines of KOT2 include Aevitas Investment, Mombasa Gas Terminal Limited (MGT), Lions Gate Limited, Focus Container Freight Station and Mansa East Africa Limited.
Once licensed, they will serve the untapped LPG market to meet the growing population and demand in the country and in the East African region.
Kenya imports about 40 percent of its gas annually from Tanzanian Liquefied Petroleum Gas (LPG) companies via the Namanga and Holili border posts, and the rest is imported ported through the port of Mombasa.
The LPG cost in Mombasa is much higher than in Dar es Salaam LPG because the unloading and storage infrastructure in the ports of Dar es Salaam or Tanga is more efficient.
p>< p>Earlier this month, Kenya began cracking down on gas importers from Tanzania, as Joseph Kaguru, the deputy commissioner for revenue and regional coordination of the country’s tax authority, announced that traders were charging an eight percent value-added tax (VAT). Paying 16 percent.
Read:KRA works to solve LPG truck congestion in Namanga
Mr. Kaguru added that the dealers are the Ship in goods from the Middle East and use the Namanga border point to pay lower taxes under the pretense that they source it from Tanzania.
With the ongoing crackdown, Kenya is now relying heavily on the new KOT 2 jetty project , which is owned by the Kenya Ports Authority (KPA) to open up the market & nd to promote competition and to increase LPG consumption and lower prices for citizens.
The new KOT2 project includes a dedicated berth and pipeline for LPG, which now allows larger ships to call at Mombasa port, promoting economies of scale and drastically reducing handling costs.