The new rate will see oil marketing companies now pay a promotional tariff of USD 41.55 per 1000 litres from the current USD 59.32 per 1000 litres making Kenya a more competitive business destination. The new tariff will be effective 1st April 2017.
Cabinet Secretary, Ministry of Energy & Petroleum, Charles Keter has approved the new tariff which is expected to reduce the cost of doing business for Oil Marketing Companies (OMCs), a move that is likely to boost regional trade between Kenya and her neighbours.
Keter said the new tariff will bolster regional business and strength the Country’s ties with neighbouring countries of Rwanda, Uganda, Burundi, DRC and South Sudan among others.
“We welcome the move by KPC to pass on the benefits of its capacity enhancement programme in the Western region to its customers as well as support regional trade by lowering the cost of doing business,” said Keter.
Kenya Pipeline Company (KPC) Managing Director Joe Sang said the move will help the state corporation re-capture the lost regional petroleum market share.
“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”, said Sang.
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 122km 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.
The line has increased product flow to Kisumu depot by 350,000 litres per hour from the previous 110,000 litres per hour increasing the country’s competitive edge in the region as a leading petroleum products exporter.
The additional product has enhanced optimization of tank utilization in Kisumu. The full tank capacity for the port town is now 39 million litres. The annual demand for petroleum products in Western Kenya is 1.1 billion litres whereas the regional demand stands at 3.3 billion litres.
KPC has also opened up development of other projects such as the Kisumu Oil Jetty (KOJ) and the planned Kisumu – Busia Pipeline. The oil jetty will facilitate transportation of petroleum product via Lake Victoria to the neighbouring countries.
On 7th March 2017, KPC signed a Lease Agreement with Kenya Petroleum Refineries Limited (KPRL) to use the entire KPRL facility, a move that will greatly increase its storage capacity in an effort to serve its customers. With KPRL on board, Kenya will shore up its strategic petroleum reserves from the current low of 12 days to 30 days with plans underway to increase the reserves to three months to spur the region’s economic growth.