Kenya Said to Pick Nigerian Energy Firm to Build Mega-LPG Facility

(Bloomberg) -- Kenya is in talks with a unit of Nigeria-based Sahara Group Ltd. to co-build a 30,000-ton facility to handle and store liquefied petroleum gas, according to people familiar with the plans.

The deal will see state-owned Kenya Pipeline Co. forming a joint venture with Asharami Synergy Plc to build the common user terminal set to be East Africa’s biggest LPG storage and bottling facility in the port city of Mombasa, said the people who asked not to be named as they are not authorized to speak publicly on the matter.

The facility estimated to take 24-months to build will be financed by Asharami, said one of the people, who expects the deal to be signed by end July. Kenya Pipeline Co. will provide land for the project located on the port-side, the people said.

The process of on-boarding a private sector company for the cooking-gas facility is ongoing, Kenya Pipeline Managing Director Joe Sang said by phone. He declined to provide further details. A spokesperson for Lagos-based Asharami, which provides warehousing and logistics terminals in the downstream oil and gas sector across Nigeria and other regions in Africa, declined to comment. 

The project is expected to help the East African nation achieve universal access to clean cooking energy by 2030. More than 90% of rural households in Kenya use biomass such as wood fuel and charcoal, according to the nation’s Energy Ministry. The fuels produce noxious gases like carbon monoxide, which are blamed for shortening the lives of more than 600,000 people annually on the continent, according to the World Bank.

President William Ruto, who is promoting Kenya as a green energy champion, wants to double the usage of LPG currently at 7 kilograms (15 pounds) per capita.

Kenya is also in talks with Saudi Aramco to obtain a floating LPG barge to bolster supply and reduce fuel prices, Sang told Bloomberg last month.

Additional storage capacity will enable Kenya to consolidate LPG imports under an open tender system that awards orders to marketers with the most-favorable pricing, Energy Secretary Davis Chirchir said in an earlier interview.

Currently, African Gas & Oil Co. Ltd., backed by AP Moller Capital, operates Kenya’s biggest LPG terminal of 14,000 tons in Mombasa.

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