KPC eyes Sh35b oil trading hub in Mombasa as earnings rise 13pc

Kenya Pipeline Company said it plans to set up a Sh35 billion oil and gas trading hub in Mombasa as among the priority projects in the coming years. [File, Standard]

Kenya Pipeline Company (KPC) has reported a 13 per cent increase in profit after tax for the year to June 2026 to Sh11.58 billion, up from Sh10.24 billion in 2025.

The company, which was partially privatised in March this year, said it would pay about half of the net earnings or Sh5.9 billion, as dividends to shareholders, who include the Kenyan government and Uganda’s national oil company (Unoc).

The company also said it plans to set up a Sh35 billion oil and gas trading hub in Mombasa as among the priority projects in the coming years.

The hub is expected to double KPC’s storage capacity, which will then enable it to grow the markets it supplies petroleum products to and include Indian Ocean islands and parts of Southern Africa, while also positioning it to tap into opportunities that the proposed Dangote Refinery in Lamu will offer.

KPC acting Managing Director Pius Mwendwa attributed the higher profitability to sustained revenue growth, improved operational efficiency and stronger cash generation from the company's core business.

KPC’s revenues grew nine per cent to Sh43 billion from Sh39.5 billion, most of it from the transportation and storage of petroleum using its network of pipelines as well as storage.

“Despite a difficult operating environment characterised by global petroleum prices and supply volatility due to the Middle East crisis, KPC Plc has managed to grow its top line and bottom line while improving operating cost efficiencies,” Mwendwa said.

The company’s total assets increased by six per cent to Sh149.3 billion, which it attributed to a 30 per cent growth in current assets and a three per cent increase in property, plant and equipment (PPE).

The board recommended a first and final dividend amounting to Sh5.9 billion, which translates into Sh0.32 per share.

Treasury previously pocketed all the dividends but will now share the money with other shareholders after it sold a 65 per cent stake in the company through an Initial Public Offering (IPO), which was concluded in March this year.

Following the offer, Treasury retained a 35 per cent stake, while the process also saw Unoc come on board with a 20 per cent stake, as well as other institutional and retail investors.

KPC Chairperson Faith Bett-Boinett said the company is pursuing a diversification of revenue streams, with among the projects that it is pursuing being the establishment of an integrated petroleum trading hub at the Kenya Petroleum Refineries Ltd (KPRL) facilities in Mombasa.

“KPC Plc, through the resources at its disposal, is working to unlock untapped potential that enables diversification beyond pipeline operations into storage, re-export, Liquid Petroleum Gas (LPG), Liquid Natural Gas (LNG), biofuels, power generation and support of third-party petroleum market trading operations,” said Boinett.

The trading hub, she said, will provide transhipment, bulk breaking, bunkering and re-export services for the regional market. Among the facilities that KPC expects will make up the hub are giant storage tanks with a capacity for 1.1 billion litres of refined petroleum products.

The company’s current storage facilities have capacity to store 1.13 billion litres of fuel while it runs a pipeline network of 1,342 kilometres.

KPC noted that its plans for the petroleum trading hub fit well with emerging developments in the region, such as the new Dangote East Africa Petroleum Refinery in Lamu as well as the upstream Gulf Energy South Lokichar projects.

“We do not want to look at Dangote refinery as a competitor. We want to see ourselves as an enabler for the Dangote Refinery. We want to see the opportunities that come with that refinery,” said Mwendwa.

KPC has recently started the process to recruit a firm that will refurbish some of the storage tanks at KPRL to store crude oil produced at the Lokichar oil fields and expects to be ready to start receiving the oil by December this year. KPC and Gulf Energy recently signed a long-term crude oil storage and handling contract that will support the export of oil produced at Lokichar.

Mwendwa said the growth strategy to expand and diversify KPC’s revenue base is expected to increase revenues from the current Sh43 billion to Sh68 billion by 2030.