World Bank's private lending arm has loaned Mombasa Gas Terminal Limited (MGT) Sh2.5 billion to construct a liquefied petroleum gas terminal in the port of Mombasa.
The funding was announced by the International Finance Corporation on June 2 and comes after the company secured regulatory approvals from the national and county governments to begin construction.
"We confirm that we have received a facility from the World Bank for the Sh2.5 billion ($23 million) phase one of our bulk (liquefied petroleum gas) LPG import and storage terminal," said MGT managing director Julius Riungu in a statement.
"The second phase will complete the storage capacity to 22,000 metric tonnes or more with annual throughput capacity of 400,000 metric tonnes per annum."
The terminal will include a private berth for unloading mid-sized LPG carriers, an onshore storage whose capacity is 22,000 metric tonnes and associated infrastructure that will have multiple landing points for transfer of LPG to transport vehicles.
"This project will underpin Kenya's ambitious goal for sustainable economic development. We are aiming to complete construction of phase one and begin operations within six months," said Mr Irungu.
Supply to increase
MGT will use tanks to transfer the gas by trucks to the Standard Gauge Railways (SGR) yard in Port Reitz, from where the commodity will be transported to Nairobi and other parts in the country.
Mr Irungu said supply of cooking gas is set to increase following the construction of the terminal, setting the stage for drop in consumer prices.
The import handling and storage unit is also expected to help relieve demand pressures through reduction of stock-outs.
Previously, oil marketers imported cooking gas individually in small quantities due to inadequate gas discharge facilities.
This led to cooking gas shortages and expensive LPG due to high import premiums and demurrage, which are penalties marketers pay shipping companies when tankers fail to offload in the stipulated time period.
The price of the 13-kilogramme cooking gas has fallen from Sh3,200 in August 2014 to the current average of Sh2,000, according to the Kenya National Bureau of Statistics, reflecting a drop of 37.5 per cent.
This has helped wean households off dirty fuels like kerosene and charcoal for cooking.