NAIROBI, Kenya, Jul 16 – Kenya Pipeline Company (KPC) has completed construction of four oil storage tanks at a cost of Sh5.3 billion.
The project involved construction of four additional tanks to provide sufficient capacity for receipt of higher volumes of diesel and super petrol products following the recent completion of the new Mombasa-Nairobi pipeline popularly known as Line 5.
The additional tanks with a capacity of 133 million litres of fuel have more than doubled the storage capacity of diesel and super petrol from the current 100 million litres to 233 million litres effectively providing sufficient capacity for receipt of higher volumes of product through the new Line 5.
The new 20-inch pipeline will ensure sustained, reliable and efficient transportation of petroleum products in the region over the next three decades.
Construction of the tanks, located at KPC’s Nairobi Terminal, commenced in November 2014 following the award of the contract to Prashanth Projects Ltd (PPL).
KPC’s Managing Director, Joe Sang said the new tanks will enhance operational flexibility and increase tank turnaround at KPC’s Kipevu Oil Storage Facility (KOSF) in Mombasa.
“Besides guaranteeing security of supply of petroleum products, the new tanks will also enhance operational flexibility and increase tank turnaround at Kipevu resulting in more ullage creation at KOSF and reduction of demurrage charges,” said Sang.
While inspecting the new tanks last week, Cabinet Secretary for Petroleum and Mining John Munyes said that the new tanks will increase KPC’s overall storage space by more than 20 per cent from the current capacity of 612.3 million litres to 745 million litres.
When full, the tanks can sustain Nairobi’s fuel needs for four months without the need to refill.
“KPC has, in essence, addressed the problem of insufficient ullage, which limited economies of scale as far as petroleum supply logistics is concerned. We are talking of a bright future in national and regional petroleum trade,” said Munyes.
At the moment, Ocean tanker owners charge marketers demurrage penalty which adds to about KES 1/litre due to insufficient ullage. Demurrage charges are incurred as vessels are forced to wait at the Mombasa port to discharge fuel into KPC’s system because of insufficient capacity.
The new tanks and Line 5 will adequately serve Kenya and the region’s petroleum demand which is projected to be 11.4 billion litres in 2020 and 24.5 billion litres in 2044.