Gas firm lines up Sh1.97b cooking gas facility near Mombasa port

Private companies are keen to reap from the increased use of cooking gas in Kenya. [iStockphoto]

Mombasa-based gas and petroleum company Fossil Supplies Ltd plans to construct a new liquefied petroleum gas (LPG) terminal near the port of Mombasa at a cost of Sh1.97 billion.

The terminal will act as a common user facility for storage and loading for LPG dealers.

It will be built on a 3.5 acres piece of land leased from the Kenya Railways Corporation near the government-owned Kenya Pipeline Company depot and Kenya Petroleum Refineries Ltd.

"The LPG facility, being a common user will enable the oil marketers access an alternative for importation and supply of liquefied petroleum gas at a competitive price to the end users," said the firm in regulatory filings seeking the nod for the project.

"The proposed project will cost approximately $16,000,000 (Sh1.97 billion)."

Fossil Supplies through its sister company Petrocity Group of companies already operates 94 petrol service stations spread across Kenya and Uganda.

Fossil distributes its LPG through its own brand of Cylinders PETGAS through its affiliates Petrocity in Kenya and Uganda. Its new import handling and storage unit is expected to help relieve demand pressures in the country through the reduction of stock-outs.

Fossil's expansion plans will also take the battle for the LPG market to dominant firms like Proto Energy, associated with local Kenyan billionaire businessman Mohammed Jaffer. Proto is the supplier of Pro Gas.

Private companies are keen to reap from the increased use of cooking gas in Kenya despite a lack of investments by the government in adequate storage facilities.

Previously, oil marketers imported cooking gas individually in small quantities due to inadequate gas discharge facilities.

This led to cooking gas shortages and expensive LPG due to high import premiums and demurrage, which are penalties marketers pay shipping companies when tankers fail to offload in the stipulated period.

Many local and foreign firms are angling for the lucrative LPG business. Kenya's energy regulator revealed last October it is considering giving a licence to Tanzanian firm Taifa Gas Investment to construct an LPG import and storage terminal in Mombasa.