Kenya to close down oil refinery in Mombasa

Apr 26, 2004 02:00 AM

The Kenyan Government is planning to close down the multi-million shilling oil refinery in Mombasa, a PS announced. Mr Patrick Nyoike of the Ministry of Energy said that the refinery would be closed "because it is has become un-economical to maintain its operations."
Nyoike said that a consortium of donor agencies have expressed interest in funding the extension of the Kenya Pipeline to Uganda starting next year. Phase one of the project is expected to begin once the Government identifies a strategic partner to foot part of the bill.

Dr Shem Ochuodho, KPC's managing Director said that the extension of the pipeline into Uganda has been placed on a fast track.
"A successful joint-coordinating commission (JCC) meeting was held in Nairobi between senior officials of Uganda and Kenya governments," he said.
Ochuodho said the meeting had resolved that an advertisement be placed in the newspapers calling for expression of interest strategic partnership. In addition, plans are underway to consider extending the pipeline to Kigali, Rwanda and eventually to Eastern DRC.

Construction of the current pipeline will include the laying of fibre optic cable along the entire length of the pipe " to meet both the security as well as the company's communications needs."
"We expected, for instance, to reduce our current bill on security, which stands at Sh 12 mm per month by at least 50 % once the cable is laid," Ochuodho said. He was, however, emphatic that KPC will not review its tariffs downwards, even though most of its clients have taken issue with existing rates.
"It should be noted that KPC tariffs were last reviewed in 1994, for ground fuels and exports and November 1995 for jet fuel," he said.

Despite the rise in inflation rates and the weakening of the shilling against major world currencies, KPC had maintained kept the tariff at the level they were 10 years ago. The company has also refrained from increasing tariff rates to cover the cost of large capital investments undertaken in the last five years, he said.
Ochuodho said that the tariffs have had little impact on the fuel costs "because pump prices at Mombasa are actually higher than in Western Kenya towns of Kisumu and Eldoret, which due to the long distance, arguably have relatively high product transportation costs."

Source: LiquidAfrica
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