Plans to reduce demurrage at regional ports

Kenya and Tanzania are planning new measures for handling imported refined fuel to reduce demurrage charges from sea tankers failing to discharge their cargo in time.

Tanker owners charge demurrage when vessels ferrying fuel delay in offloading cargo due to lack of storage facilities in Mombasa and Dar es Salaam ports; the cost is passed on to consumers.

Kenya has new procedures to improve the turnaround time of offloading petroleum products at the Kipevu Oil Storage Facility in Mombasa; in Tanzania, Tanga port is set to become the second discharge point for fuel.

This month, Tanga is expected to handle imported fuel to reduce the pressure on Dar es Salaam port.

In Mombasa, firms are allocated ullage (storage space) in the Kenya Pipeline Company (KPC) system on individual throughput volume.

Marketing firms in Kenya pay an annual average of $100 million as demurrage. Energy regulators in the two East African countries include demurrage in the cost buildup factors when setting retail prices of fuel.

Kenya and Tanzania are competing to increase the share of oil products for delivery to Uganda, Rwanda, Burundi and eastern Democratic Republic of Congo. Tanzania uses roads to transport fuel from Dar es Salaam port to other countries.

Kenya supplies about 90 per cent of Uganda’s oil products. Fuel is pumped inland from Mombasa to the Eldoret, Nakuru or Kisumu depots of KPC, before being ferried by road tankers to Kampala and other destinations.

Ecobank predicts that the region’s fuel imports could grow by 8 per cent in 2015 and 2016, due to increased demand for petrol driven by rising urbanisation, population growth and increase in vehicle users.

Source: The East African

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.

One thought on “Plans to reduce demurrage at regional ports”

Silvester M. Kututa says:

July 16, 2015 at 1:34 PM

This is very good. A suggestion though: Currently there is no reliable data and statistics on how much really demurrage ships have incurred in these ports as a result of berthing and other delays. I estimate it to be in billions of Kenya Shillings. could you kindly assist develop a measurement model? It will help to identify this problem and also tailor a solution

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