Hass Petroleum is investing Sh500 million in a new oil and gas depot in Nairobi’s Industrial Area, becoming the latest oil marketer to expand its infrastructure.
The company has sought regulatory approval to build a fuel depot with capacity to hold 6.1 million litres and a liquefied petroleum gas (LPG) facility on a five-acre land it owns in the area.
Hass, which does not have its own depots locally but subcontracts from the Kenya Pipeline Company (KPC), joins the likes of Vivo Energy and National Oil Corporation which have been investing in extra capacity over the past few years.
“We have submitted our proposals to Nema and we expect construction to take around one year after approval,” said Issa Mohamed, Hass’ chief executive officer.
“Our internal estimate is that the facility will be operational by the first quarter of 2017, subject to how fast we get financing from commercial banks. The cost of the project is between $4 million (Sh408 million) and $5 million (Sh510 million).”
The 18-year-old firm has operations in Tanzania, Uganda, South Sudan, Rwanda, Burundi and the Democratic Republic of Congo with a total installed capacity of over 30 million litres.
The proposed depot will be the first inland facility in Kenya owned by the oil marketer, a sign that it is stepping up competition with other marketers.
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Extra storage is critical to oil marketers in Kenya because of thin profit margins from sales with bulk supplies holding the key to profitability, hence the push to boost storage capacity.
“Kenya has a big shortage of such facilities hence the construction of the proposed development goes a long way in solving part of the huge problem of affordable fuel and LPG depot establishments,” Hass notes in its filings to Nema.
“Several other fuel depot facilities are located within Industrial Area such as Hashi Energy, Total, Kenol Kobil, Vivo Energy, OilLibya hence the proposed project is in character with the surrounding.” Oil firms have stepped up expansion of product storage facilities to boost their competitiveness.
Vivo Energy recently announced it had constructed a new fuel storage tank and upgraded another at its depot in Shimanzi, Mombasa, pushing its overall petrol holding capacity to 19 million litres.
SOURCE: BUSINESS DAILY