Mombasa Gas Terminal, a company specialising in the importation, storage and marketing of liquefied petroleum gas (LPG), has received a loan from Ksh. 2.5 billion from the World Bank’s Private Sector Lending arm – the International Finance Corporation (IFC). The financing facility will fund the construction of the first phase of the construction of an LPG import and storage terminal.
The funding, which was announced by the IFC on June 2021, comes after the company secured regulatory approvals from the national and county governments.
“We confirm that we have received a facility from the World Bank for the Ksh. 2.5 billion ($23m) Phase One of our bulk LPG import and storage terminal. The second phase will complete the storage capacity to 22,000 metric tons or more with annual throughput capacity of 400,000 metric tons per annum. This project will underpin Kenya’s ambitious goal for sustainable economic development. We are aiming to complete construction of Phase One and begin operations within six months.” said Mombasa Gas Terminal (MGT) Managing Director Eng. Julius Riungu.
According to Eng. Riungu, several global LPG market players are in discussion to participate in long-term partnership with the project.
MGT is owned by Dubai-based Milio International Limited, a trader of refined fuels.
The new terminal will include direct mooring access for very large-sized LPG carriers, storage and associated infrastructure that will have multiple loading points for transfer of LPG to road and rail transport.
Eng. Riungu said that the LPG import terminal would serve both industrial and domestic users through dealer networks and will support the government’s Big Four agenda by powering manufacturing, enhancing food security, improving healthcare and complimenting affordable housing efforts through reticulated gas systems.
“We embarked on the Mombasa Gas Terminal project to reduce supply constraints and improve the affordability and accessibility of clean fuel usage in the country for both industry and households. Data published by the government shows that the disease burden attributable to Household Air Pollution is high and our aim at MGT is to become part of the solution by enabling and promoting LPG supply and uptake in the country. We at MGT are very excited at the possibilities that we will create an opportunity for our fellow Kenyans to improve the quality of their environment and their health.” said Eng. Riungu.
Government and market data shows that the current LPG market in Kenya is over 300,000 metric tons per year and the estimated potential market in East Africa could be well over 1,000,000 metric tons by 2027, as infrastructure constraints are removed and LPG becomes an affordable and accessible fuel to a larger population.
The project is aligned to Kenya’s target of achieving universal access to modern cooking solutions by 2030 in line with Sustainable Development Goal number 7 which is to ensure access to affordable, reliable, sustainable and modern energy for all. Among the cooking energy solutions envisaged include LPG, electricity, biogas, bioethanol and improved solid fuel cookstoves.
A recent study published by the Ministry of Energy in 2019 shows that 93.2% of the rural population still rely on solid fuels as their primary fuel source. The study also shows that households using LPG as the primary fuel still use, on average, 42% of the amount of charcoal used by households that depend on charcoal as the primary fuel.
The increased use of clean fuels is designed to support the move by the Government to restore Kenya’s forest cover to 10 percent up from the current 7 percent by directly reducing the demand for charcoal and firewood as the primary sources of energy, especially at household levels.