Kenya Pipeline Company (KPC) has secured a US$350mn loan to finance the construction of a new 450 km-long oil pipeline from Mombasa to Nairobi
The state-owned oil distributor will replace the more than 30-year old 14-inch pipeline currently in use and upgrade to a 20-inch ultra-modern multi-product oil pipeline. The loan has been secured from a consortium of six local and international banks – CFC Stanbic, Citibank, Commercial Bank of Africa, Co-operative Bank, Rand Merchant Bank (a division of FirstRand Bank Limited London Branch) and Standard Chartered Bank.
KPC acting managing director Flora Okoth said that work is expected to be complete by April 2016. “The contractor is on the ground as we speak, he has procured most of the items required for the project. The terms of completion is eighteen months but plus or minus, we are looking at April 2016.”
Lebanese firm Zakhem International has won the contract to construct the pipeline.
Speaking about the impact of the new pipeline, Okoth said, “This will enhance product flow from the current 730,000 litres per hour to one million litres per hour. Once our lines are on, we will be taking approximately 4,000 trucks per day off the Mombasa-Nairobi route.”
The loan has 10-year repayment period. KPC will finance 30 per cent of the project and is putting in US$150mn in the US$490mn project. The loan is one of the largest commercial bank financing deals made in Kenya by a state-owned entity without a government guarantee.
