Asharami to breakground on KPRL, gas terminal in October

A section of the oil lines connecting Kenya Petroleum Refineries Limited to various oil marketers in Mombasa. [File, Standard]

Nigeria’s Asharami Synergy is set to start construction of the 30,000 metric tonne cooking gas storage facility at Kenya Petroleum Refineries Limited (KPRL) in October 2026, eyeing completion before the end of 2028 amidst queries on how the firm upstaged the Kenya Pipeline Company (KPC) that was planning for a similar facility on the same location.

KPRL has leased out 23.19 acres of land at its Changamwe facility to Asharami Synergies for the development of a liquefied petroleum gas (LPG) facility for a term of 31 years.

In the deal, the KPC owned KPRL will earn an annual rental fee of Sh22.5 million, which the firm will use to develop the LPG storage facility that will be open to firms importing cooking gas into the country at a fee, according to new disclosures by the Ministry of Energy and Petroleum.

Petroleum Principal Secretary Kello Harsama said the site was handed over to Asharami Synergy by KPRL on December 9, 2025. The firm has also received the requisite permits, including construction permit by the Energy and Petroleum Regulatory Authority (Epra), and the firm is currently preparing to start construction later this year.

“Groundbreaking is expected in October 2026 with the actual construction estimated to take 24 months. The project shall therefore be commissioned as a common user facility in the fourth quarter of 2028,” said the PS in a July 14 update to MPs on the progress of the project.

The project was initially to be undertaken by KPC, but a last-minute directive from the Ministry of Energy and Petroleum saw KPC cede to Asharami to deliver the facility under a public-private partnership model.

KPC had spent Sh192.64 million in undertaking studies, including demand survey, Environmental and Social Impact Assessment (ESIA), Front End Engineering Designs (Feed) and the cost estimate for the project.

In giving out the parcel to the Nigerian firm, KPC lost potential future earnings it would have made from offering logistical services to LPG importers that could be more lucrative and will instead have to settle for rent paid by Asharami.

PS Harsami told the MPs that KPRL will earn Sh22 million annually in rent money.

“The financial terms of the lease agreement between KPRL and Asharami Energy are as follows... annual rental fee of Sh22.52 million payable annually on the commencement date and subject to escalation every five years,” said the PS.

The LPG handling facility is seen as among the game-changing investments in lowering the cost of gas by increasing local LPG handling capacity and, in turn, see the government introduce Open Tender System of LPG importation as well as control of the retail price of cooking gas.

It is also part of the LPG national growth strategy, through which the government intends to nearly double per capita consumption of cooking gas to 15 kilogrammes by 2030 from the current 7.9kgs.

“The facility shall provide additional storage capacity of 30,000 metric tonnes that enables implementation of the bulk import arrangement. Due to the economies of scale resulting from consolidating imports, the landed cost of LPG is expected to reduce, thereby promoting uptake. The specific outputs that the State Department intends to achieve through this project is increased LPG uptake from 15 per cent to 70 per cent within four years and establishment of a common user facility,” said Harsama.

“The project shall improve security of supply of LPG and affordability through the anticipated lower cost of gas due to economies of scale.”

Asharami has in recent past been playing an increased but also critical role in Kenya’s petroleum industry. Other than the construction of the mega cooking gas facilty, the firm was in 2024 brought on board as among the firms that handle fuel imported into the country through the Government to Government fuel import programme.

The firm, alongside seven other local oil marketing companies including Gulf Energy, BE Energy, One Petroleum and Galana Oil manages offloading of fuel imported under the deal as well as payments from local oil marketing companies on behalf of the three international oil firms – Saudi Aramco, Abu Dhabi National Oil (Adnoc) and Emirates National Oil (Enoc).