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No end in sight for fuel leaks

By By Njiraini Muchira
Updated Tue, November 13th 2012 at 00:00 GMT +3

By Njiraini Muchira

Plans by the Kenya Pipeline Company (KPC) to replace the derelict oil pipeline from Mombasa to Nairobi hang in the balance due to lack of funds.

More than a year after KPC unveiled plans to construct a new pipeline from Mombasa to Nairobi, the process is yet to gather steam.

Business Weekly has since established that the government failed to convince local commercial banks to finance the project billed at over Sh27 billion.

Efforts by the government, through the Ministry of Energy, to convince local commercial banks to form a consortium and finance the project have not been successful — something that now puts the project in jeopardy.

Failure to secure funding for the new pipeline — supposed to be constructed over the next two years — is causing panic in the petroleum industry. A survey conducted on the existing line had earlier showed the infrastructure cannot continue being in operation beyond 2014.

The delays in constructing the new pipeline that is expected to significantly improve flow of petroleum products between Mombasa and Nairobi will continue exposing Kenyans to major shocks in relation to fuel supply.

Already, the confusion dogging the project is having negative impact on the industry as concerns are being raised that the inefficiencies in the existing pipeline are being exploited to bring in petroleum products irregularly.

This is because the obsolete pipeline has few control mechanisms to prevent instances of abuse not only by oil marketers but also by corrupt KPC personnel.

Derelict system

Diversion of products meant for neighbouring markets to being sold in Kenya and instances of hoarding of products within KPC systems are said to be taking place due to the loopholes existing in the archaic pipeline infrastructure.

The petroleum industry in the country has all along operated in a ‘full time crisis mode’ and the country has been treated to theatrics of the absurd, with the scenario worsening in the recent years.

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