Kenya eyes oil importers with 50pc slash in tariffs

Monday November 4 2019

Oil tankers parked outside the Port of Mombasa.

Oil tankers parked outside the Port of Mombasa. Oil passes through Kenya either as transit for foreign financed product or as exports where Kenyan companies finance the product. PHOTO | KEVIN ODIT | NMG  

BOB KARASHANI
By BOB KARASHANI
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EDWIN OKOTH
By EDWIN OKOTH
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Kenya has slashed pipeline tariffs by 50 per cent as it seeks to win back oil importers from landlocked countries to its network, after it lost the regional fuel transport market to Tanzania’s port of Dar es Salaam.

The tariffs scheduled to be gazetted by the Energy and Petroleum Regulatory Authority set the rate at $30.89 per 1,000 litres from the previous $60 for the same volume.

The three year revision will see the rates fall further fall marginally to $30.65 in 2020 and to $29.07 in 2021.

Currently, it costs $60 per 1,000 litres of fuel that passes through the Kenyan pipeline and a further $35 on trucks to and from destination countries, compared with an average of $80 to move oil via Tanzania’s Central Corridor road network to and from Dar es Salaam.

The tariff revision is hot on the heels of an announcement by Tanzania last week that it was forming a task force operating a One Stop Centre at the Dar port to improve efficiency.

Works, Communications and Transport Minister Isaack Kamwelwe said the team will bring together at least 20 stakeholder organisations from key institutions, both public and private, involved in cargo clearance at the port.

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These include the Tanzania Port Authority, the Tanzania Revenue Authority, Tanzania Food and Drugs Authority, Tanzania Bureau of Standards, Tanzania International Container Terminal Services, Tanzania Freight Forwarders Association, Tanzania Truck Owners Association and the Dar es Salaam Corridor Group.

The announcement brings to the fore the fierce competition for business between the two ports as each country seeks to attract traffic to its transport corridor.

Kenya’s Northern Corridor has long been the preferred route by landlocked countries but recently, the Central Corridor through Tanzania has gained favour especially with importers in DRC and Rwanda.

In June, Finance Minister Philip Mpango in his budget speech announced the scrapping delivery fees, stripping fees, export fees, and container cleaning charges at the Dar port.

The country also outlined plans to have Malawi, the DRC and South Sudan increase their import and export cargo volumes through Dar. South Sudan signed a bilateral agreement to at least double its annual transit cargo volume.

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