Pipeline in Sh40b plan to relieve pain at the pump
Business
By
Dalton Nyabundi
| Sep 03, 2016
The Kenya Pipeline Company’s (KPC) Sh40 billion plan to devolve oil to far flung regions of the country has begun in earnest with the commissioning of Sh160 million feasibility study.
Irani Engineering Company, Ghods Niroo and Kenya’s CAS Consultants won the tender in June and will look into the modalities of transporting oil along three new national priority routes – Lamu-Isiolo-Moyale, Nakuru-Nanyuki-Isiolo and Kisumu-Busia – in the first phase of the project that seeks to lower transport costs passed on to customers.
The consultants whose services started on August 17 are also expected to determine potential locations for depots with capacity to store 20 million litres of fuel each in five regions – South Nyanza, South, Central and upper Eastern, Lower Eastern and upper Coast and Western Kenya.
CAS Consultants, which is the local partner, is undertaking environmental impact assessment studies in selected regions while Ghods Niroo is developing preliminary engineering designs, which include hydraulic analysis, determination of optimal pipeline sizes, depot capacity and other associated infrastructure.
In KPC’s projections, taking the petroleum depots to the five towns —including border crossing points of Migori and Busia, will yield cheaper transportation costs. Such savings should translate to lower pump prices, even though the eventual pricing is determined by the Energy Regulatory Commission (ERC) using a predetermined formula.
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Devolution of pipeline infrastructure entails construction of channels and depots to the counties from the main pipeline network.
The initiative is part of KPC’s 10-year portfolio expansion that seeks to push profit before tax up eight times to Sh80 billion from the current Sh10.7 billion, with the asset base projected to rise to Sh790 billion.
Corporate Communication Manager Jason Nyantino said the project will benefit 20 million Kenyans. “Transport costs will fall by half and we are certain the ERC will harmonise prices across the country.”
Inadequate reserves are one of the reasons the global drop in oil prices has failed to translate into reduced fuel prices in the country. He said the decision was informed by the need to boost security of supply, a move which could steady the ever-fluctuating fuel prices in the country.
“We are also working on large volume depots to ensure that supply is always high. This move we believe will go a long way in cushioning the country from global shocks,” he told Weekend Business.