Kenya’s erratic supply of liquefied petroleum gas (LPG) is set to be streamlined with the completion of a new offshore import handling terminal in Mombasa.

Africa Gas and Oil Ltd (AGOL) has completed building a bulk import handling and storage terminal to ease the quick offloading of sea tankers ferrying over 5,000 tonnes of LPG from the Middle East.

Marketing firms importing LPG for distribution in East Africa will pay for using the bulk offshore depot. The depot has a storage capacity of 14,000MT.

Kenya’s Energy Permanent Secretary Patrick Nyoike said the Ksh12.5 billion ($142.8 million) privately-owned terminal will address the constrained LPG supply in the country as well as benefit marketers through economies of scale from bulk LPG importation.

“Retail LPG prices will decline with AGOL facilitating importing of large cargoes and eliminating payment demurrage charges as penalties when tankers fail to offload due to lack adequate storage capacity,” said Mr Nyoike, adding that the facility is expected to start operations soon. The depot was initially scheduled to be operational by July 2012.

It was expected to relieve demand pressures through reduction of stock-outs, thus effectively reducing the price of LPG.

READ: Firms seek to meet LPG demands

Demurrage is currently borne by consumers as the LPG terminal at Shimanzi in Mombasa has a capacity of just 1,400 MT. Tankers carrying 2,500 tonnes of gas have to off-load subject to availability of storage space.

A 6kg cylinder of LPG retails for about Ksh1,300 ($15.29) and the 13 kg cylinder goes for Ksh2,400 ($28.23) in Nairobi. Erratic supply often leads to price increases by retailers.

Kenya consumed 62,499 MT of liquefied petroleum gas in 2011. The country’s per capita consumption of LPG of 2.1kg is low compared with Senegal’s 12.2 kg, the highest in sub-Sahara Africa.

Mr Nyoike said AGOL’s offshore discharge vessel, which has a storage capacity of 11,000 tonnes, will enhance LPG supply and complement annual output of 30,000 MT of gas of Kenya Petroleum Refineries Ltd.

The offshore terminal is linked to onshore Miritini distribution centre in Mombasa by a 12 inch pipeline 5km long. The onshore facility will be expanded later according to market demand.

The onshore terminal in the industrial area of Miritini, has modern fire-fighting equipment and is close to the Mombasa -Nairobi highway. It also has space for a rail siding that is set to be constructed soon.

Energy Regulatory Commission said AGOL’s storage facility will allow big stocks of imported LPG to be off-loaded in one go.

“With bigger cargoes arriving, adequate supply and competition will make LPG prices more stable. There have been fluctuations when temporary shortages occur,” said ERC director general Mr Kaburu Mwirichia.

LPG is an environmentally friendly source of energy and its use in Kenya is expected to rise to 300,000 MT.

“LPG cylinders of 1kg and 3kg have been introduced to cater for people in the lower income bracket, to reduce dependence on wood fuel,” said Hydrocarbons Management Consultants director Robert Shisoka.

Kennedy Senelwa and Peterson Thiong’o