Kenya has slashed pipeline tariffs by 50 percent in effort to win back importers from landlocked countries to its network years after it lost the regional fuel transport market to Tanzania.
The tariffs scheduled to be gazetted by the Energy and Petroleum Regulatory Authority set the rate at $30.89 (Sh3,089)per 1000 litres from the previous $60 for the same volume.
The three-year revision will see the rates further fall marginally to $30.65 in 2020 and later to $29.07 in 2021.
EPRA Director- General Pavel Oimeke said the new tariffs will not hurt revenues for Kenya Pipeline Company (KPC) which had earlier on in the year applied to have the rates increased.
“The tariff is sufficient to meet revenue requirements for KPC but it also needs to work on operational efficiency to be comparable to international pipeline transport companies like TRANSNET of South Africa,” Mr Oimeke said.
Kenyan petroleum exports dropped 43 percent from Sh2.1 billion in the first six months of 2018 to Sh1.2 billion in the first half of 2019 due to the high pipeline tariffs.
Oil marketers pay on average $80 to ferry oil from Dar es Salaam on trucks but pay $60 tariff on pipeline to Kisumu and a further $35 to truck the product to Uganda, Rwanda and Northern Tanzania buying countries. Tanzania has also stepped up competition by increasing efficiencies at the port.
Kenya’s dwindling export market had earlier been blamed on fuel adulteration in a move that saw the government introduce a Sh18 per litre levy on Kerosene which was said to be the main adulterant.