Kenya: KPC Secure Sh35 Billion for New Mombasa-Nairobi Pipeline

Kenya Pipeline Company has secured a $350million (Sh35.6 billion) loan to finance the construction of a new 450-kilometre oil pipeline from Mombasa to Nairobi.

The state owned oil distributor will upgrade to a 20 inch ultra-modern multi-product oil pipeline to replace the more than 30 year old - 14 inch pipeline currently in use.

Speaking during the loan signing with a consortium of six banks, KPC acting managing director Flora Okoth said work is expected to be complete in eighteen months from the July 1 2014 contract signing date. Lebanese firm Zakhem International won the contract.

The six local and international banks are 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.

"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," said Okoth.

The loan has 10 year repayment period. KPC will finance 30 per cent of the project and is putting in $150 (Sh15.3 billion) in the Sh50.9 billion project.

"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 off approximately 4,000 trucks per day off the Mombasa-Nairobi route," Okoth said.

The loan is one of the largest commercial bank financing ever entered into by a Kenyan parastatal without government guarantee.

"KPC can be seen like a proxy for the government. It has a profitable track record and a strong asset base,"said chairman John Ngumi.