Kenya Pipeline Company (KPC) has taken over the defunct state-owned Kenya Petroleum Refineries Ltd (KPRL), which it will use to store imported fuel.
This is the second time the facility is changing hands after Shell and the British Petroleum Company (BP) sold it to Indian investor Essar Energy Overseas Ltd in 2016.
Essar Ltd, which failed to revive the facility, relinquished its shares to the government in 2016; just six months after acquiring it at a cost of $5 million.
Kenya’s Energy Permanent Secretary Andrew Kamau said the takeover coincides with the launch of the New Kipevu Oil Terminal, which started a dry run this past week at Mombasa port.
Officials say that the acquisition of the refinery by KPC will significantly cut on perennial inefficiencies that have characterised the petroleum products’ supply, which often translates into high prices at the pump, amid shortages.
According to the Energy and Petroleum ministry, the refinery’s storage tanks for fuel and liquefied petroleum gas will help reduce a backlog at the terminal.
KPRL has 45 tanks with a total storage capacity of 484 million litres of which 254 million litres are reserved for refined products while the remaining is reserved for crude oil.
KPC, on the other hand, has seven storage depots with a total capacity of 612 million litres with another four tanks at its Nairobi terminal with a combined capacity of 133.5 million litres.
The refinery has remained inactive since 2013, after plans to inject $1.3 billion into the plant to improve its operations were abandoned. The increased storage capacity at KPC is expected to save oil marketing firms millions paid to shipping firms as storage charges.