Revamping fuel pipeline network cuts cost of living

High fuel prices remain a major challenge directly contributing to rising cost of living afflicting millions of Kenyans.

Tackling this challenge is at the core of various strategic initiatives being undertaken by the Kenya Pipeline Company (KPC).

These initiatives mainly target enhancement of the national petroleum distribution and storage efficiency and capacity.

Once complete, these interventions will significantly lower the cost of living of Kenyans.

To begin with, petroleum is a valuable commodity supplying 22 per cent of the country’s energy needs.

The rest comes from biomass (69 per cent) and electricity (9 per cent). Petroleum is crucial to the optimal functioning of transport, manufacturing and agriculture sectors, which jointly account for over 45 per cent of the country’s GDP.

Many Kenyans may not know that petroleum is Kenya’s third largest export. Not the crude oil coming from Turkana but processed petroleum products exported to neighbouring countries. Kenya currently imports all of its petroleum products.

Petroleum exports to countries like Uganda therefore partly offset this huge import bill. They also improve the country’s terms of trade thus stabilising the shilling.

This translates into cheaper prices of essential commodities like food, clothing and fuel.

It is often not easy to glean this nexus but the fact of the matter is that the strategic importance of petroleum to the economy cannot be under-stated.

Despite the obvious significance of petroleum as a commodity, it has largely been neglected thanks to the lack of policy and inefficient distribution and storage infrastructure.

Yet a stable and adequate supply of petroleum has a direct positive effect on economic growth while indirectly contributing to improved livelihoods and living standards of Kenyans.

The KPC is the institution tasked with transportation and storage of petroleum.

This role however goes beyond merely moving the commodity along the pipeline and storing it in huge tanks.

By ensuring a reliable and adequate supply of petroleum in the country, KPC acts as an enabler of the broader social and economic goals as espoused in Vision 2030. 

The KPC is currently undertaking major strategic interventions to achieve this mandate. I call them strategic because they directly and indirectly contribute to the transformation of the lives of ordinary Kenyans.

One such initiative currently underway is the installation of a 20-inch diameter pipeline from Mombasa to Nairobi to replace the existing 14-inch line.

While it will improve petroleum supply capacity inland, the new line is also designed to minimise incidents of damage to the environment such as spills. It also comes with lower maintenance costs.

The project is fully on track contrary to reports in the media.

Importantly, the new line will act as a platform for accelerated expansion of the petroleum distribution network in line with the decentralisation of economic activity as a result of devolution.

Indeed, devolution presents a solid case for expanding Kenya’s petroleum distribution infrastructure to mashinani where the real economic action is taking place.

The KPC is also doubling the storage capacity at its Nairobi deport with an additional 132 million litres expected to be available before the end of this year.
Enhancing the capacity of the main Mombasa-Nairobi pipeline means increasing storage space inland. Besides the Nairobi depot, KPC is also boosting storage capacity by creating hubs in the major towns.

In Eldoret, for example, we are constructing an additional truck bottom loading facility that will boost storage and evacuation of fuel to the hinterland.

There will be no need for trucks to drive all the way to Nairobi to fetch fuel and unnecessarily increasing local pump prices.

Moreover, lower prices mean that transport costs like matatu (public service vehicles) fares should ultimately come down. Transporting agricultural inputs and farm produce will be cheaper.

The upshot of this is that the ongoing initiatives being undertaken by KPC will spur economic activity at the grassroots. The positive knock-on effect on the livelihoods and living standards of the ordinary person will be phenomenal. 

To boost petroleum exports to neighbouring countries, KPC has fast-tracked completion of the Kisumu Oil Jetty to facilitate lake transportation of the commodity.

Efficient movement of petroleum products across the border is instrumental to growth of regional trade. This project is expected to be complete by end of this year.

Mr Ngumi is the Chairman, the Kenya Pipeline Company