The National Treasury and the Ministry of Energy and Petroleum have signed the deed of the agreement allowing for the takeover of Kenya Petroleum Refineries Limited (KPRL) by the Kenya Pipeline Company (KPC).
The signing of the agreement today acts as the game changer for KPRL that closed down in 2013 due to old technology in the refinery.
There was also a challenge with the euro ship as many products of crude oil like paraffin were in high demand but KPRL ended up making loses because the final product contained a lot of sulphur content due to the refinery’s old technology.
Therefore, the Ministry of Energy and Petroleum used to force the marketing oil companies to off take the 10 per cent of refinery before being allowed to import the finished product which still did not save the company.
To counter this, in 2018, an agreement was reached to allow KPC to bring an updated assets and this saw progress. In addition, KPRL also got 300 acres of land which was considered a great facility to allow expansion and installing Liquefied Petroleum Gas (LPG) tank to do a whole value chain and grow LPG from about 6.8 kg per house hold per capita currently to about 15kg and to lower the price of cooking gas hence supporting the climate change by not cutting tress.
In July this year, the Cabinet approved the acquisition of Kenya Petroleum and Refineries Limited (KPRL) by Kenya Pipeline Company (KPC) and gave the Ministry of Petroleum and Energy and the Ministry of Treasury the mandate to form a technical and steering committee to consolidate and come up with the shared agreement of the two Parastatals.
Speaking during the signing ceremony, Petroleum and Energy Cabinet Secretary (CS) Davies Chirchir congratulated the team of the two committees for working and coming up with a concrete report.
He said his Ministry seeks to work with international companies to service the region by doing significant investments through Private Public Partnership (PPP) to pump petroleum products in the region.
Similarly, Treasury CS Prof. Njuguna Ndung’u noted, “We are trying to optimize the resources that we have to give us value at this particular time as we thought what we had was optimal for KPRL but with time things changed.”
According to Ndung’u, there is a belief that by combining resources KPC and KPRL could be optimized.
Bearing in mind that technology do change, and activities sometimes are left behind due to power demand, and even operation, he maintained that taking over of KPRL plays a significant role in its growth.
Further, Ndung’u revealed that the government through the National Treasury has transferred 100 per cent shares held at KPRL to KPC without any mandatory considerations as both institutions are owned by the government hence it’s like a return transfer.
He said that they are strengthening capability and capacity and this agreement showed the government’s support and operational relationships between the two organizations and the value they create.
By Okal Kevin
