Kenya Pipeline Company Limited (KPC) has cut the cost of transporting fuel to neighbouring countries by nearly a third in a bid to win back business lost to Tanzania.
Pipeline costs for products headed to Rwanda, Congo, Uganda, Burundi and South Sudan from the port of Mombasa will be $44.55 (Sh4, 579) per 1,000 litres, up from $59.32 (Sh6, 098).
This will see the importers save about Sh1.52 per litre for fuel transported on the pipeline and picked in Kisumu or Eldoret for neighbouring countries.
Countries such as Rwanda and Burundi have stepped up fuel imports through Tanzania’s main port in Dar es Salaam, arguing that Kenya’s route is expensive and experienced contamination of cargo.
Mombasa is facing increased competition from neighbouring Tanzania where the government is expanding the port of Dar es Salaam and plans to spend $10 billion building a new one at Bagamoyo, 52 kilometres (32 miles) north.
KPC managing director Joe Sang said the move to cut the cost will help the state corporation re-capture the lost regional petroleum market share.
“We have lost our market share especially in Rwanda and Burundi. We must get this rightful share back and this calls for proactive and strategic thinking. We not only want to regain the lost market, but also extend our operation into new frontiers in the region,” said Mr Sang.
The lower charges dubbed a promotional rate will start in April. The Kenya Transporters Association earlier said importers from regional countries were opting to route shipments through Tanzania because its fuel were untainted.
“Kenya’s position as the preferred petroleum importation route for landlocked East African nations is slipping out of our hands,” said the association in an earlier interview with the Bloomberg.
“It’s because importers feel our fuel is contaminated. We have unscrupulous traders. We have cases where some load transporters siphon fuel, add other products and when it gets to the destination countries, it is found to be adulterated.”
Tanzania also allows heavier loads on its roads. Importers to neighbouring countries have to use the road from Kisumu or Eldoret.
Mombasa is a gateway for imports to Rwanda, Burundi, Uganda, South Sudan, Eastern Congo and northern Tanzania and also an exit point, mainly for agricultural commodities such as tea and coffee.
While Kenya’s economy has been dominant in the region for decades, Tanzania, which is geographically bigger and holds vast quantities of gold and gas, is vying for more economic and political sway.
In addition to the new port, the country is planning a $7.6-billion railway connecting Dar es Salaam to Burundi, Rwanda, Congo and Uganda.
The link could rival Kenya’s own new rail line targeting the same countries. Construction of the first phase of Kenya line, which will connect the Mombasa port to Nairobi is almost complete and operations will start this July.
Source: Business Daily
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