Govt Abandons Ksh150 Billion Fuel Facility After 63 Years


Energy Cabinet Secretary Davis Chirchir on Wednesday announced that the government is planning a complete overhaul of the Kenya Petroleum Refineries Limited (KPRL) valued at Ksh150 billion.

Speaking in Mombasa during the handover ceremony of KPRL to the Kenya Pipeline Company (KPC), Chirchir raised concerns about KPRL’s business model. 

He highlighted that KPC is planning to dispose of KPRL’s obsolete assets and technology and initiate a fresh start. 

“KPRL’s balance sheet is Ksh150 billion. They (KPC) will look at the business model. Do we build the refinery? It was built in the 1960s,” Chirchir explained.

A photo of the KPRL crude refinery plant

KPRL

The Cabinet Secretary specifically underscored the outdated nature of KPRL’s technology, deeming revival unfeasible. He emphasized the imperative of adopting new, contemporary tech to phase out outdated versions.

Chirchir also pointed out that since the situation involved one parastatal taking control of another, the Mombasa County government wouldn’t receive shares in the upcoming facility to be constructed by KPC. 

The CS who was flanked by Mombasa Governor Abdulswamad Nassir, mentioned that the national government had considered it prudent to engage with the county leadership before proceeding with the transition.

In agreement, Governor Nassir announced that his administration will not seek benefits from the new entity, and will instead lobby to benefit from the Kenya Ports Authority (KPA).

“Taita Taveta got their shares with the Park (Tsavo) and we are seeing if we can get something from the port as it is the true definition of natural resource,” Abdulswamad remarked.

Abdulswamad was alluding to President William Ruto’s announcement on August 22, which gave way to county governments enjoying a share of revenues derived from national parks within their jurisdiction. The President said the move would enable equitable sharing of revenue between the national government and counties.

Nonetheless, the Mombasa Governor assured that his County would play a role in developing infrastructure leading to the facility. 

The Takeover

The takeover of KPRL by KPC was approved by President William Ruto’s cabinet in July this year in a move that aimed at strengthening the country’s petroleum supply chain infrastructure.

“This State intervention is expected to enhance petroleum supply chain infrastructure and thereby result in the security of supply and cost efficiency through reduced demurrage costs and enhanced penetration of LPG usage in the country through the development of LPG bulk import handling and storage facilities,” the cabinet dispatch read in part. 

The main service provided by KPRL was crude oil refining but operations were indefinitely stopped in September 2013.

A photo of Cabinet meeting held at State Lodge, Sagana, Nyeri County on August 8, 2023.

PCS





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