Plans are at an advanced stage for the acquisition of Kenya Petroleum Refineries Limited (KPRL) by Kenya Pipeline Company Limited (KPC).
The move by the state is anticipated to improve petroleum supply chain infrastructure resulting in security of supply and cost efficiency through reduced demurrage costs.
The government further hopes to improve the penetration of Liquefied Petroleum Gas (LPG) usage in the country through the development of LPG bulk import handling and storage facilities
Energy CS David Chirchir said that the Kenya Kwanza administration wants KPC to leverage the assets of KPRL to accelerate the use of LPG as a transitional fuel to mitigate the challenges of climate change.
Chirchir said the takeover will result in the optimal utilization of 370 acres of KPRL facility in Changamwe constituency by fostering synergy in the petroleum value chain through efficient use of the existing downstream petroleum infrastructure.
He said the government has made a deliberate policy to grow the use of LPG from the current about seven kilogrammes of LPG per household per capita to about 15 in the next three to five years, and extra facilities are needed.
The CS underscored the need to take advantage of being a bunkering facility in the region leveraging on the KPC Sh150B balance sheet to ensure youths get employment opportunities.
Chirchir on Wednesday held talks with Mombasa County leadership on how they can improve the utilization of KPRL assets.
The CS disclosed that KPRL was closed down in 2014 because of refinery yield challenges, the products that were refined did not match planned output and thus were not making profits.
“There is no reason that KPRL is not working for us as a prime asset sitting with 370 acres and touching the Indian Ocean. What cabinet did on 18 July approved the acquisition of KPRL by KPC through transfer of shares – acquisition by transfer of shares,” said CS Chirchir
KPC, he added comes to KPRL with a strong balance sheet hence KPRL will roar back to life to improve Mombasa’s economy, create jobs, and attract investors.
“We will work with the County Government of Mombasa to revamp KPRL assets to work for the people of Mombasa, the country, and the region because we are internationally situated to be able to serve Uganda, Rwanda, and even play a competitive advantage against our neighbors in Dar es Salaam,” said CS Chirchir.
The CS allayed fears that the acquisition would result in job losses for KPRL employees.
Price Water Coopers (PWC) did a study on the best acquisition option and “we have zeroed in on acquisition by transfer of shares as opposed to transfer of business that would have many challenges.”
The CS further assured Mombasa leadership that due processes will be followed to the letter as government assets move from one entity to another.
“We will be talking to the staff of KPRL to assure them that they are in safe hands. They have however been working with KPC through a lease agreement where KPC has been using the tank farms, they have rehabilitated most of the tank farms,” said CS Chirchir.
KPC will consider reviving the refinery through new technology to produce clean refinery yields, not harm vehicles.
The CS said they expect KPC to look at the investment options, take advantage of location, and ensure that KPRL is working for the country, and the region and improving the lives of Kenyans.
Mombasa Governor Abdulswamad Nasir assured the CS of cooperation for a seamless takeover. He said the County Department of Urban Planning will work closely with KPC for social amenities to be set up on the 370 acres.
By Sadik Hassan
