PETROLEUM FUELS THE ECONOMY
Kenya Pipeline Company is consolidating its role as the dominant player in the regional energy sector

Kenya Pipeline Company transports 90 percent of petroleum products consumed in Kenya

A ready supply of energy is vital to Kenya’s ambition to become an industrialized state by the year 2025. Currently, the country relies on electricity and petroleum products, but the government is investigating various forms of sustainable, environmentally friendly energy, including the use of liquid petroleum gas (LPG).
The largest proportion of the electricity supply comes from hydropower stations at dams along the upper Tana River, as well as the Turkwel Gorge Dam in the western part of the country. Oil fired and geothermal power stations, and electricity imported from Uganda make up the rest of the supply.

The electricity sector has been liberalized, and, according to Minister of Energy Ochilo Ayacko, there are major investment opportunities available. “We need investment in generation and transmission, and U.S. companies can play a pivotal role,” he says.

Along with its neighbors, Uganda and Tanzania, Kenya is heavily dependent on imported petroleum. Approximately 75 percent of the commercial energy required to facilitate economic growth and development in Kenya comes from petroleum products.

The three East African countries are working together to promote investment opportunities in petroleum exploration in the region. Though little exploration for oil has taken place in Kenya, recent seismic tests have revealed that the coastal region may have high potential for natural gas.
Kenya Pipeline Company Ltd (KPC) transports approximately 90 percent of the petroleum products consumed in Kenya’s domestic market. As the owner and operator of the only refined petroleum products pipeline in East Africa, KPC is also the dominant player in the regional energy sector, exporting to Uganda, Tanzania, Rwanda, Burundi, Democratic Republic of Congo, and Sudan.

This is a role it aims to expand and consolidate. “The company’s domestic environment is the entire Eastern and Central African region,” says George Okungu, KPC’s Deputy Managing Director.
The company was formed as a fully-owned government parastatal in 1973 to provide an efficient, reliable, and low cost means of transporting petroleum products to Nairobi from the Port of Mombasa, where Kenya has a 4.2 million-ton capacity oil refinery.

A second pipeline stretches from Eldoret to Kisumu in the west of the country, and the company’s most recent project is to extend the pipeline from Eldoret to Kampala in Uganda, under the auspices of the East African Community (EAC).
The combination of high economic growth and low development in the region provides KPC with the opportunity to increase its export volume. The EAC and COMESA trading blocs represent a move toward an expanded commercial environment, which the company is seeking to exploit.

Mr. Okungu believes that an environment is evolving that will change the way business is being done in the region. “This is the time for the East African Regional market to really integrate their economies and carry out joint ventures,” he says.
“For instance, it makes more sense to build another extension from the existing Kenya pipeline to serve Tanzania, rather than Tanzania going it alone and building one from Dar es Salaam.”