Government set to build oil pipeline to Western Kenya

NAIROBI, FEBRUARY

Construction of a 325-km fuel pipeline from Nairobi that will initially double supplies to Eldoret, will start in 2011, the Kenya Pipeline Corporation said yesterday.

China Petroleum Pipeline Engineering Corp has been awarded a contract for phase one worth Sh13.4 billion of the estimated Sh14.2 billion ($187 million) cost of a larger project, said Selest Kilinda, managing director of the Kenya Pipeline Company (KPC).

The pipeline will run parallel to the existing Western Kenya Pipeline, which has a flow rate of 220 cubic metres per hour.

That is not enough to meet demand in Kenya or in neighbouring countries, Kilinda said.

"The Western Kenya Pipeline system capacity enhancement will be ... operational from 2011 to 2021 with a flow rate of about 394 cubic metres per hour," he told Reuters.

"KPC will fund the project to the tune of Sh8 billion from internally-generated resources while banks will loan the company Sh8.2 billion," he said.

first phase

Work in the initial phase that is scheduled to end in 2011, includes construction of the 14-inch channel, three booster pumps, four mainline pumps and product transfer facilities.

CFC Stanbic Bank is the lead banker, Kilinda said, in conjunction with Commercial Bank of Africa and Citibank.

Subsequent phases will increase the flow rate to 534 cubic metres per hour by 2022 and to 709 cubic metres per hour by 2025, Kilinda said.

KPC doubled the pumping capacity of its refined products pipeline running between a refinery in Mombasa to the Nairobi to 880 cubic metres per hour last year.

Proposed extension

KPC’s network runs from Mombasa to Nakuru, then branches to Eldoret and Kisumu. Kenya hopes to extend the pipeline past Eldoret and possibly into Uganda.

The plans have not progressed much since Uganda said it wanted to construct its own refinery to process its newly-discovered oilfields.

A refinery at Kenya’s coast serves most of east Africa. KPC’s constrained capacity means a lot of the refined oil has to be trucked to neighbouring countries, increasing the degradation of the country’s already dilapidated roads.

KPC is one of several corporations the Government wants to privatise.

It made Sh8.3 billion in revenues in the year ending June 2008, from Sh8.8 billion a year earlier.

—Reuters