Chirchir directs Pipeline to transfer land to investor

Energy and Petroleum Cabinet Secretary Davis Chirchir has directed Kenya Pipeline Company (KPC) to transfer part of its 300-acre land in Mombasa to a private firm.

Chirchir wants KPC to lease part of the land to a Nigerian firm that seeks to construct a 30,000 metric ton capacity Liquefied Petroleum Gas (LPG) import terminal.

The 306 acres of land situated in Changamwe, Mombasa was initially owned by the Kenya Petroleum Refineries Limited (KPRL) that has now been taken over by KPC.

In a letter dated September 29, the CS asked KPC Managing Director Joe Sang to initiate the process of leasing the land just days after the state completed the transfer of KPRL to KPC.

“The Ministry is in receipt of a letter from Asharami Synergy Limited which is part of the Sahara Group, expressing intent to lease the KPRL premises for the purpose of constructing a 30,000 metric ton LPG import terminal,” the letter states.

It adds; “This is a positive development towards actualizing the Government’s LPG growth strategy as recently approved by cabinet and which envisioned embracing the private sector in efforts to transition the country to clean cooking.”

The letter is copied to National Treasury CS Prof Njuguna Ndung’u, Petroleum PS Mohamed Liban and Energy and Petroleum Regulatory Authority (EPRA) Director General Daniel Kiptoo.

“For this reason, KPC is hereby directed to lease part of the land to the refinery previously operated by KPRL to Asharami through due process which shall include obtaining all necessary approvals,” Chirchir added.

Leasing the land

Sources at the KPC indicate that the agency is hesitant in leasing the land as KPC itself plans to put up an LPG facility in the land.

“The board met and reviewed the request but did not approve it; the chair will be communicating the same to the ministry in due time,” a senior member of KPC said. Yesterday CS Chirchir defended the directive saying it’s part of Kenya’s dream for alternative energy, saying Asharami seeks to put up a ‘common user’ facility that will be available to all LPG dealers.

Clean energy

“We are encouraging private investors to invest in clean energy and this will help in reducing reliance on charcoal and wood. Our aim is to reduce the cost of gas by about 40 per cent ” he said.

Although the Minister’s letter did not indicate how many acres the Nigerian firm was eying, Chirchir said it would be between 20 to 40 acres.

In July this year, the Cabinet approved the acquisition of KPRL by KPC and gave the Ministry of Petroleum and Energy and the Ministry of Treasury the mandate to form a technical and steering committee to consolidate and come up with the shared agreement of the two parastatals.

The transfer agreement and supporting documents were signed last month by National Treasury Cabinet Secretary Njuguna Ndung’u and Energy and Petroleum Cabinet Chirchir.

“The signing of this share transfer agreement is to formalize and deepen the governance and operational relationship between KPC and KPRL hence creating a subsidiary-parent relationship between the two state corporations,” said Prof Ndung’u.

The move by the state is anticipated to improve petroleum supply chain infrastructure resulting in security of supply and cost efficiency through reduced demurrage costs.

The government further hopes to improve the penetration of Liquefied Petroleum Gas (LPG) usage in the country through the development of LPG bulk import handling and storage facilities