Kenya Pipeline Co. Mulls Storage-Leasing Plan for Idled Refinery

  • KPC invites advisers to help it decide on strategy for assets
  • State-held company also studies building LPG import facilities

State-owned Kenya Pipeline Co. said it’s considering leasing out storage tanks at the country’s only oil refinery, and isn’t currently looking at restarting fuel-processing at the idled plant that was acquired by the government this year.

KPC has invited bids from advisers to help it decide how best to use the refinery’s assets, which Kenya bought from India’s Essar Oil Ltd. in April. Options for the assets, now held by state-owned Kenya Petroleum Refinery Ltd., also include building import facilities for liquefied petroleum gas and other products, according to the pipeline company.

“KPC is looking for options on how to utilize the assets," Chairman John Ngumi said in a phone interview.

The 80,000-barrel-a-day Mombasa refinery, previously a joint venture between the government and Essar, hasn’t processed crude since it was converted to an oil-storage facility in 2013. Kenyan Treasury Secretary Henry Rotich said in April the East African nation agreed to pay Essar about 500 million shillings ($4.93 million) to assume full ownership of the plant. 

KPC, which operates a 1,220-kilometer (760-mile) domestic pipeline network, said in March it planned to “diversify into other oil and gas business ventures in various countries within the East and Central African region.” The company said July 5 that it’s considering selling Eurobonds in 2017 or 2018 to finance projects.

KPC has a longstanding policy to expand storage capacity and replace fuels like charcoal and firewood with LPG, Ngumi said. He also said any move to restart production at the refinery would be a decision for the government, which would have to look for “someone who is able to get the refinery going.”

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