Fuel pumping bill hits Sh2bn on costly power
The costs incurred by Kenya Pipeline Company to pump fuel to consumer depots rose by 16.7 percent to Sh2.125 billion in 2021 on higher power costs
The costs incurred by Kenya Pipeline Company (KPC) to pump fuel to consumer depots rose by 16.7 percent to Sh2.125 billion in 2021 on higher power costs and product output even as the firm races to cut its power bills.
KPC is one of the largest power consumers in the country and has dedicated lines at different voltages to dozens of its fuel pumping stations across the country.
In 2021, the State-owned company consumed 114 million units of electricity for Sh2.125 billion, an increase from 108.87 million units in 2020 which cost Sh1.821 billion.
The increase in KPC’s power costs was driven by higher product output after demand rose owing to the relaxation of Covid-19 related restrictions as well as the increased cost of power during that time.
The unit cost of power incurred by the company grew by 11.4 percent to Sh18.64 per kilowatt-hour (kWh), up from Sh16.73 per unit in the previous year.
KPC is, however, seeking to cut these costs at a time it is enjoying higher tariffs charged to oil marketing companies for pumping fuel through its pipelines.
The company is recruiting a consultant to audit of its energy use and recommend cost-cutting measures.
“The general scope of work shall include proposing solutions which will realise the reduction of electricity costs in KPC pump stations,” it said in a disclosure.
“The detailed scope of work shall include a full energy audit of pipeline utilities including energy assessment of pumps, energy relations for incompressible fluid flows, piping system characteristics, pump performance parameters, matching the pump to the system, energy efficiency opportunities for pumps, computing for projected energy savings, implementing energy saving measures.”
This comes five months after the government approved an increase in depot tariffs of up to 34.5 percent in a move that is enabling KPC to collect more cash to meet its energy costs and splash on big-money projects.
The Energy and Petroleum Regulatory Authority (Epra) in November last year raised the depot tariffs for oil marketers evacuating fuel from KPC’s Nairobi depot to Sh2,526.6 per cubic metre until July from Sh2,074.5.
The tariff will rise to Sh2,582.72 per cubic metre from July and further to Sh2,791.85 next year.
The costs are passed on to consumers.
The charges cater for the costs the agency incurs for pumping fuel through its pipeline, pipeline losses, the costs of evacuating the fuel to tankers, depot losses, and the costs of delivering the fuel to petrol stations that are within 40 kilometers of Nairobi.
