Kenya is hoping to surmount the financing obstacles bedevilling a new pipeline that is vital in facilitating the easy transportation of petroleum products.
The new line, which was conceived about four years ago, is intended to replace the derelict Mombasa–Nairobi pipeline.
When it was unveiled in 2010, the 450 km pipeline project was expected to cost $300-million. However, failure to secure funding has seen the price soar, with Kenya Pipeline Company saying the project will now cost $500-million.
The State-owned company has put out a tender seeking long-term financing for the project, whose construction is slated to start in July, with completion scheduled for 2016.
“The line is designed to meet petroleum products demand from the East African region to 2044,” the company says.
China’s Sheng Li Engineering & Construction Company has since been awarded the design and construction supervision contract.
The existing line has been in operation for the last 35 years and is unable to meet rising demand for petroleum products, despite the Kenya government having invested $92.4-million in 2008 to increase its flow rate from 440 m3/h to 880 m3/h.
The line’s inefficiencies have forced oil companies to largely depend on road transport to move products from the Port of Mom-basa to other parts of the country.
Kenya and landlocked countries like Uganda, Rwanda, Burundi and parts of the Democratic Republic of Congo depend on the pipeline for the transportation of petroleum products.
As Kenya implements its long-term growth master plan, Vision 2030, demand for petroleum products is expected to continue on an upward trend.
According to a report by the Kenya Institute for Public Policy Research and Analysis, demand for petroleum products is expected to continue increasing at an average rate of 7%/y over the next 16 years.
Consumption of petroleum products has on average been increasing, with the transport sector, which includes land, water and air transport, being the largest consumer of petroleum products, followed by manufacturing, power generation and agriculture.
The petroleum subsector accounts for 8.4% of the country’s gross domestic product.