Kenya Pipeline signs financing for Sh35bn Mombasa-Nairobi line

July 15, 2015
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Kenya Pipeline depot/FILE
Kenya Pipeline depot/FILE

, A consortium of local and international banks has arranged a long-term facility of USD 350m (Sh35B) for Kenya Pipeline Company (KPC) as 70 per cent financing of the USD 484m to be used for the new of 20-inch 450km Line V multi-product fuel pipeline running from Mombasa to Nairobi.

The consortium of banks includes CFC Stanbic Bank, Citibank N.A. (Kenya branch), Co-operative Bank, Rand Merchant Bank (a division of First Rand Bank Limited) and Standard Chartered Bank. The facility will fund the replacement of the 35-year-old 14-inch 450km Line 1 multi-product fuel pipeline and is not guaranteed by government with KPC using its financial standing to raise funding for the infrastructure.

The 10-year loan bears a margin of 5.38% over LIBOR (Kenya USD 2bn Eurobond carries a premium of 4.28% for a similar maturity). The new Line will have a throughput of 1 million litres per hour versus 730,000 litres per hour on the current pipeline. It will also have four new pumping stations.Firefighting systems will also be upgraded to handle the larger product volumes.

Kenya’s total pipeline infrastructure spans 900kms from Mombasa to Eldoret and Kisumu through Nairobi. KPC has an on-going expansion program targeting a bigger diameter pipeline from Sinendet in Nakuru to Kisumu to increase product volumes by an additional 360,000 litres per hour, along with additional storage in Nairobi to more than double capacity to 233 million litres for diesel and super.

The Jomo Kenyatta International Airport Greenfield depot will also increase jet fuel storage from 54m litres to 126m litres. KPC is working with private agencies -VTTI Kenya (Kenyan coast) and Petrocity (Konza), to determine options for optimal use of their storage facilities.

Meanwhile, The Energy Regulatory Commission (ERC) has revised upwards the price of petroleum prices for the fifth consecutive month. On a month on month basis, Kerosene (+1.6%) went up the most while super and diesel rose by 1.3% and 1.5% respectively. Prices now stand at KES 98.59, 84.56 and 62.74 per liter for super, diesel and kerosene respectively.

 Standard Investment Bank

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