Posted on :Wednesday , 4th April 2018
Managing Director Joe Sang of Kenya Pipeline Co said that the company has plans to build facilities worth $125 million to handle and store liquefied-petroleum-gas with a view to boosting cooking-gas use in the rapidly urbanizing nation.
The government in East Africa’s biggest economy has scrapped value-added tax on cooking gas and has subsidized the cost of 6-kilogram cylinders in a bid to make the fuel more attractive and affordable for its citizens, most of whom prefer cheaper firewood, charcoal, and kerosene. For city dwellers LPG is more convenient and currently, 30 percent of Kenyans live in urban areas and the total number of people living in towns is expected to quadruple by 2045, according to the World Bank.
“It will improve the current inadequate LPG supply, distribution and storage infrastructure, as well as increased utilization of clean energy,” Sang said.
According to the Energy Regulatory Commission, Kenya’s monthly LPG consumption ranges between 15,000 and 23,750 metric tons, the government wants to increase usage to 15 kilograms per person by 2030 from about 4 kilograms currently.
Sang said state-owned KPC is evaluating bids for the building of the plants, one in the capital, Nairobi, and the other in Kenya’s second-biggest city, Mombasa. Construction is scheduled to begin in October and the facilities will be ready by the end of December 2020.
The $65 million depot in Mombasa will have the capacity to store 25,000 tons of gas, rail and truck loading, and bottling facilities. The company plans to double the storage capacity once the plant is operational to meet regional demand from landlocked economies including Rwanda and Uganda.
The $60 million plant in Nairobi will have the capacity to store 10,000 tons of gas, and equipment to refill cylinders. The facilities will be Kenya’s first publicly owned cooking-gas terminals and will secure availability and stability of supplies for the region, as well as diversify KPC’s revenue sources, Sang said.
To fund the plants, KPC may seek green financing from development institutions, though it has yet to settle on the funding mix for the project, Sang said. There’s growing investor appetite for green finance -- investment funding for projects that burnish environmental credentials while also giving a yield.
While LPG is derived from fossil fuels, it’s preferable in the country where forest cover is receding from logging for charcoal and firewood. Kenya’s forested area is 7.3 percent against the recommended 10 percent, according to its Environment Ministry.
“The opportunity to access green climate funds from multilateral institutions will be explored as well as the project finance option,” he said.