Nairobi — The entry of more private players in the construction of oil terminals will lead to reduced fuel prices for motorists, an industry insider has said.
Petrocity Managing Director Aman Kurji said on Tuesday that a key factor in determining the price of fuel by the Energy Regulatory Commission (ERC) is the trucking costs incurred during the transport of products from Mombasa to Nairobi and the demurrages caused when vessels have to wait at the port due to lack of space at the Kenya Pipeline Company (KPC) depot.
"Truck transportation is about Sh2.50 more expensive than pipeline transportations, so if this demurrage is reduced or eliminated then we're looking at a good saving of anything from Sh2 to Sh4 per litre on the cost," he revealed.
He spoke while unveiling a Sh1.5 billion terminal which is to be located in Konza on the Nairobi-Mombasa highway.
The facility, whose construction began in January, is about 50 percent complete as they plan to cater to Nairobi's growing demand for fuel by increasing availability of petroleum products to new entrants and independent dealers who have limited access to truck loading facilities in Nairobi.
"Companies are seeking to reduce their reliance on the KPC to avoid inconveniences that come with lack of capacity," he stated.
"Independent oil marketers and trading companies are therefore investing in new storage facilities in a move to stabilize their supplies and cut expenses," he confirmed.
The project will have two phases, in which 12 tanks with a capacity to store up to 150 million litres will be built for the storage of gasoline, diesel and kerosene.
If a shipment is delayed, they will have one month's stock to fall back on and Kurji revealed that after the second phase is completed, they will have two months of stock cover for Nairobi.
"We hope to create a strategic reserve for Kenya in the tune of 120-150 million litres which we can fall back on should a vessel delay or if there are any pumping problems from Mombasa," he said.
"Nairobi is 65 percent of the market and it will have access to stock which is only 70 kilometres from the city, making it easily accessible," he added.
Petrocity will have a highly advanced stock controlling computerised system set up by the major American conglomerate company Honeywell, to provide oil marketers with live and up-to-date stock positions instantly.
The complete package to be supplied by Honeywell includes the pipeline receipt system, tank farm, truck loading system and terminal automation.