IFC financing construction of Kenyan LPG import, storage facility

6th August 2021 By: John Muchira - Creamer Media Correspondent

Kenyan company Mombasa Gas Terminal (MGT) is set to build a liquefied petroleum gas (LPG) import and storage facility, after receiving a multimillion-dollar loan from the World Bank Group.

The privately owned company intends to develop the greenfield LPG terminal at the port of Mombasa.

The aim of the project is to address challenges of LPG supply and inadequate infrastructure at the port to support Kenya’s LPG masterplan, which is designed to increase the use of the clean cooking fuel instead of harmful energy sources such as charcoal and firewood that are commonly used by Kenyan households.

The World Bank, through its private-sector arm, the International Finance Corporation (IFC), has approved the loan for the project, which will be financed by an initial loan of $5-million and $10-million in additional debt arranged by the IFC.

The balance of $8-million will be equity contribution by MGT.

“The project is expected to improve customer access to reliable supply of LPG fuel and improve its affordability. Through the substitution of solid fuel with environmentally cleaner LPG, the project is also expected to decrease greenhouse-gas emissions,” says the IFC.

Currently, Africa Gas & Oil Limited (AGOL) has a near-monopoly on bulk LPG importation and storage in Kenya.

The company imports 90% of the LPG consumed in the country.

AGOL’s LPG import and storage infrastructure consists of 30 000 t of offshore import and storage capacity, as well 375 t of onshore storage capacity. The company is expanding the import storage facility through the addition of 20 000 t of capacity.

State-owned Kenya Pipeline Company has been mulling over a $125-million investment to construct a 20 000 t common user import and storage facility.

Although LPG consumption in Kenya has been increasing, with monthly consumption ranging from 15 000 t to 23 750 t, government statistics indicate that 93% of the rural population still relies on solid fuels as their primary fuel source.

Kenya has set a target of achieving universal access to modern cooking solutions by 2030, in line with the United Nations Sustainable Development Goals.