The new project will significantly boost Kenya’s chances of regaining its share of the East African petroleum market with improved fuel supply to western Kenya. The country’s grip on the regional market has been shaken by Tanzania’s central corridor which is said to have fewer market entry barriers than the Kenyan route. The Kisumu KPC oil jetty is geared towards reclaiming this market share.
“The construction works are progressing well and we are now at 80 percent. Hopes of boosting volumes for export to Uganda and Rwanda from Kisumu are now real,” KPC General Manager for Infrastructure Engineer Billy Aseka told Kenya Engineer during a recent site visit.
“The facility will triple the volumes as Kenya faces competition from Tanzania as the regional oil and gas hub,” he said.
KPC awarded the contract to Southern Engineering Company (SECO), a 60-year old Kenyan engineering company, specializing in a range of land and marine, civil, mechanical and structural engineering, containerized camps and hospitality services, heavy lifts and inspections as well as shipbuilding and ship repair services in projects throughout East Africa. SECO is the flagship company of Alpha Group’s Marine Division.
The oil jetty will facilitate transport of petroleum products via Lake Victoria to neighbouring Uganda, parts of Tanzania, Burundi and Eastern DRC settings Kisumu on course to become one of the largest inland ports in Africa. The jetty is expected to boost throughout in Kisumu by one billion litres a year in phase 1 and up to three billion litres a year by 2028, with maximum pipeline throughput. The export target is part of the KPC’s 10-year Vision 2025 plan to plunge into upstream and downstream activities of oil and gas.
“The jetty will also create integrated marine fuel transportation, making it more efficient and commercially viable and reduce transportation costs for oil marketing companies,” Engineer Aseka observed adding that the jetty’s primary target market is around the lake and expanding the export market into Uganda and mines in northern Tanzania.
To boost supply to western Kenya and the entire East Africa region, KPC has expanded its pipeline in Kisumu depot by adding a Sh.5.7billion 122km 10-inch diameter pipeline parallel to an existing 6-inch diameter line from Sinendet. The project which was commissioned last July has significantly boosted petroleum availability in western Kenya and the export market. The increased flow to Kisumu depot by 350,000litres an hour from the earlier 110,000litres an hour has increased the country’s competitive edge in the region. Kisumu, which always had only 30per cent tank utilization, has seen a sharp rise in usage to its full tank capacity of 39million litres through improved supply.
The annual demand for petroleum products in western Kenya stands at around 1.1billion litres, while regional demand is slightly over 3.3billion litres. Recent data show that Kenya is losing its top position as the preferred petroleum import route for landlocked East African nations, despite a surge in local consumption. In half a decade, the number of petrol stations in Kenya have grown 23 percent from 1,382 to 1,707, while marketers have doubled from 47 to 87, according to the Energy Regulatory Commission (ERC).
In contrast, the regional market has declined slightly with some of the neighbouring countries reducing the amount of fuel they import from Kenya. The country began losing the regional market partly due to restrictive axle load requirements and fuel adulteration using kerosene. Refined petroleum is the country’s third largest export product after tea and cut flowers. In 2015, Kenya exported a total of two billion litres to the five East African countries and the Democratic Republic of Congo raking in $700million.
KPC General Manager for Strategy Martin Kimani has declared that Kenya was already on a charm offensive to woo Rwanda, which has favored Tanzania because of the axle load advantage. “We must make deliberate efforts to get back the lost market share. Certainly, the construction of the Kisumu oil jetty is one of the avenues that will open new opportunities for KPC,” he told participants during a tax summit organized by the Kenya Revenue Authority.