Moving oil by road cheaper despite Sh48 billion pipeline

Transportation of petroleum products by road from the port of Mombasa remains cheaper than using the new Sh48 billion oil pipeline, the Energy regulator told Parliament on Wednesday.

The Energy and Petroleum Regulatory Authority (EPRA) said road transport of petroleum products from Mombasa to Eldoret is cheaper by between Sh1,500 ($15) and Sh2,000 ($20) per cubic metre compared to pipeline transport.

Pavel Oimeke, the EPRA director-general told the National Assembly’s Energy Committee that it costs $89 per cubic metre to transport petroleum products through the pipeline from Mombasa to Kampala in Uganda. The same costs $75 per cubic metre to transport by road.

EPRA said the cost of transportation of petrol products to Eldoret by pipeline is $54 and increases by $34 from Eldoret to Kampala.

Mr Oimeke told the committee chaired by Endebes MP Robert Purkose that the cost increases for exporting products to Uganda, Rwanda and Congo given that extra cost is incurred by trucks loading fuel at the Eldoret Kenya Pipeline Company (KPC) depots.

MPs asked the energy regulator to explain why the costs for transporting oil through the pipeline remains high when the new Mombasa-Nairobi pipeline commonly known as Line 5 was expected to significantly reduce transport costs.

“We spent more than Sh48 billion to improve pipeline efficiency from Mombasa to Nairobi. Why are we transferring costs to the customer when Kenyans invested heavily in the new Line 5?” Mr Purkose asked.

The MPs pushed Mr Oimeke to confirm whether concerns raised by Petroleum Institute of East Africa (PIEA) that there is an extra $15 to $20 that exporters pay to ship petroleum products through the port of Mombasa.

Kenya has lost the oil imports market to Tanzania, where Uganda’s going through Mombasa have dropped from a high of 90 percent to 40 percent.