Kenyans, laden with high fuel costs, will soon start enjoying lower prices of petroleum products.
This follows Kenya Pipeline Company’s revelation of a drastic reduction in its storage costs.
The company says it is a matter of time before the benefits of the four storage tanks at its Nairobi depot start trickling down to taxpayers.
Managing Director Joe Sang told MPs on Wednesday that the firm had already cut by 50 per cent, fuel storage costs.
He cited the commissioning of 133 million-litre storage tanks at the company’s Nairobi terminal.
Sang told the National Assembly departmental Committee on Energy that the monthly demurrage costs had reduced significantly from Sh154 million in June to Sh79 million in October.
“Besides guaranteeing the security of supply of petroleum products, the new tanks have also enhanced operational flexibility and increased tank turnaround at Kipevu, Mombasa, resulting in more ullage creation and significant reduction of demurrage charges.”
The reduction of the storage charges means that Kenyans will soon start paying less for their fuel because demurrage costs are usually factored in the prices set by the Energy Regulatory Commission.
At the moment, tanker owners charge marketers demurrage penalty, which adds to about a shilling per liter, due to insufficient ullage.
Demurrage charges are incurred as vessels are forced to wait at the Mombasa port to discharge fuel into KPC’s system because of insufficient capacity.
Sang told the panel chaired by David Gikaria (Naivasha East MP) that the construction of the tanks located at KPC’s expansive industrial area depot was completed in May at a cost of Sh5.3 billion.
The KPC boss had been invited by the Gikaria-led committee for an update on the progress of key petroleum projects being implemented by KPC.
He said the four additional tanks were constructed to provide sufficient capacity for receipt of higher volumes of diesel and super petrol products following the recent completion of the new Mombasa-Nairobi pipeline popularly known as Line 5.
The new line was also completed on June 30 and is already operational.
“Line 5 is already operational and is currently running at 800,000 litres per hour. We are working towards attaining the targeted installed flow rate of one million litres per hour,” the KPC boss said.
The additional tanks have more than doubled the storage capacity of diesel and super petrol from the earlier 100 million litres, bringing the total capacity to 233 million litres.
The new 20-inch pipeline will ensure sustained, reliable and efficient transportation of petroleum products in the region over the next three decades.
The tanks’ construction commenced in November 2014 following the award of the contract to Prashanth Projects Ltd (PPL).