(Charles Gichane) The entry of other private players in oil terminals will eventually lead to reduced fuel prices for motorists.
Petrocity Managing Director Aman Kurji noted that a key factor in determining the price of fuel by the Energy Regulatory Commission (ERC) is the trucking costs incurred during the transport of products from Mombasa to Nairobi, and the demurrages caused when vessels have to wait at the port due to lack of space at KPC tanks.
At a presentation on the new oil refinery that will be in direct competition with Kenya Petroleum Refineries Limited (KPRL), Kurji said that the refineries strategic position near the Nairobi-Mombasa highway could see Kenyan motorists save money on fuel by November this year, upon completion of the Petrocity oil terminal being built at the Greenfield terminal storage facility in Konza city.
“ERC factors into the pricing model the demurrage and they also factor in the truck transportation from Mombasa to Nairobi,” he acknowledged.
“Truck transportation is about Sh2.50 more expensive than pipeline transportations, so if this demurrage is reduced or eliminated then we’re looking at a good saving of anything from Sh2-4 per litre on the cost,” he revealed.
They have invested Sh1.5 billion into the project which began construction in January and Kurji confirmed that it’s about 50 percent complete as they plan to cater to Nairobi’s growing demand for fuel by increasing availability of petroleum products to new entrants and independent dealers, who have limited access to truck loading facilities in Nairobi.
Kurji said that the introduction of a new oil refinery will help the country because the competition will greatly benefit consumers and oil marketers.
“Companies are seeking to reduce their reliance on the Kenya Pipeline Company (KPC) to avoid inconveniences that come with lack of capacity,” he stated.
“Independent oil marketers and trading companies are therefore investing in new storage facilities in a move to stabilize their supplies and cut expenses,” he confirmed.
The project will have two phases, in which 12 tanks with a capacity to store up to 150 million litres will be built for the storage of gasoline, diesel and kerosene.
If a shipment is delayed, they will have one month’s stock to fall back on and Kurji revealed that after the second phase is completed, they will have two months of stock cover for Nairobi.
“We hope to create a strategic reserve for Kenya in the tune of 120-150 million litres which we can fall back on should a vessel delay or if there are any pumping problems from Mombasa,” he said.
“Nairobi is 65 percent of the market and it will have access to stock which is only 70 kilometres from the city, making it easily accessible,” he added.
Petrocity will have a highly advanced stock controlling computerized system set up by the major American conglomerate company Honeywell, to provide oil marketers with live and up-to-date stock positions instantly.
The complete package to be supplied by Honeywell includes the pipeline receipt system, tank farm, truck loading system and terminal automation.