Indian firm targets Lake Victoria oil transport deal

An Indian investor plans to transport oil products between Kisumu and Port Bell in Uganda via Lake Victoria in a bid to cut high costs incurred moving the commodity by road.

Kenya Pipeline Company (KPC) acting managing director Flora Okoth says discussions have been going on with the Indian firm Mahati, which has won an 18-month contract with the government of Uganda for the supply of oil.

Ms Okoth says the move, if successfully executed, will cut the number of trucks on the road coming from Uganda to collect fuel in Kenya.

“We have been in discussion with an Indian investor so that he can start evacuating oil from our depot in Kisumu to Uganda via Port Bell,” said Ms Okoth in an interview with Shippingand Logistics.

She said the investor will use water vessels to transport the consignment, giving room for evacuation of huge volumes of fuel at a go hence creating space for storage of more oil given that Kenya has constraints in oil storage capacity.

The current oil infrastructure storage KPC depots stands at about 612.32 million litres.

KPC targets to construct four storage tanks with a total capacity of 133.52 million litres to boost its storage facilities and to develop a strategic national petroleum reserve to stabilise supplies. The country has no strategic reserves presently and relies solely on oil marketers’ 21-day oil reserves required under industry regulations.

Kisumu is deemed a critical hub for trade with neighbouring countries such as Tanzania and Uganda as well as Rwanda, Burundi and countries in the Great Lakes Region.

Ms Okoth noted ongoing expansion of the Kisumu oil pipeline with commissioning to be done next year in April.

The new pipeline’s capacity has been enhanced from 100,000 litres per hour to 400,000 litres per hour.

“The new pipeline is going to increase the capacity by three times what the current line is holding per hour,” she said, adding that the amount of fuel the new pipeline will handle per hour once it is commissioned is equivalent to more than 12 fuel trucks transporting oil by road. Fuel tankers normally have a capacity of 33,000 litres.

The move will also save the time taken by trucks on the road as well as reduce damages on roads caused by heavy weight. Tankers take almost two days on the road to transport a consignment from Mombasa to Eldoret.

The government has been expanding the pipeline’s capacity in western Kenya to minimise the number of lorries going to Nairobi or Mombasa for fuel from the region from Uganda, Burundi and Rwanda.

In 2010, the State embarked on the process of expanding the Nairobi-Nakuru-Eldoret pipeline, commissioning it in 2011 with a new capacity of 440,000 litres per hour compared 220,000 litres per hour prior.

The KPC boss also noted that plans are afoot to expand the Eldoret pipeline to Uganda, a move that will be significant for the East African Community bloc.

SOURCE: BUSINESS DAILY