New oil terminal to help cut fuel prices–EPRA - Beaking Kenya News

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Tuesday, 6 October 2020

New oil terminal to help cut fuel prices–EPRA


Fuel prices are expected fall with the completion of the new Kipevu Oil Terminal (KOT), according to the Energy and Petroleum Regulatory Authority (EPRA).

EPRA said demurrage charges are likely to drop as the new facility will be able to berth four vessels (three petroleum and one LPG) at once, hence save on the vessel queuing time.

Demurrage is a charge payable to the owner of a chartered ship on failure to load or discharge the ship within the agreed time.

With speedy cargo evacuation, the country will save on demurrage costs to the tune of Sh0.50 per litre per month for each of the three price regulated petroleum products, said the regulator.

“This will translate into minimal demurrage costs,” EPRA acting director general Mueni Mutung’a said in an interview with the Star.

The country will also enjoy economies of scale from use of bigger vessels.

Kenya Ports Authority latest project update indicates the new facility, being developed at a cost of Sh40 billion, is about 63.22 per cent complete, and should be ready in twelve months.

“The project is fully financed by the Kenya Ports Authority and once complete will expand our capacity to serve our increasing needs as well as the needs of our neighbouring countries that rely on Mombasa port for oil imports,” KPA management told the Star.

The modern oil facility will accommodate bigger vessels of up to 170,000-deadweight tonnage compared to one ship of 110,000 deadweight tonnage on the existing oil terminal, improving on capacity and efficiency on handling energy products.

The country has for decades depended on the old Kipevu Oil Terminal and the Shimanzi terminal near the Likoni Ferry channel to offload oil products. The two can only handle one oil tanker at a time.

“KOT is expected to handle larger vessels and more than one at the same time As a result, freight charges for vessels that will be handled at the new KOT are expected to be lower basing on the bigger vessel capacity,” Mutung’a said.

The facility will also handle more varieties of products that  include LPG, crude oil or heavy fuel, aviation fuel, diesel and petrol.

It is designed to have five onshore pipelines, each dedicated to a separate oil product to existing Kenya Petroleum Refineries Limited (KPRL) and Kenya Pipeline Company tanks in Mombasa.

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