KPC enters drinking water business in revenue push
Oil storage tanks at the Kenya Pipeline Company in Nairobi. The state corporation has ventured into the drinking water business as part of an aggressive diversification programme that also saw it launch fibre optic cable services last year.
Kenya Pipeline Company (KPC) has ventured into the drinking water business as part of an aggressive diversification programme that also saw it launch fibre optic cable services last year.
The State corporation disclosed that it would put up a water treatment and bottling plant at its Morendat station in Naivasha to meet the needs of its internal staff and open new revenue streams through sales to external consumers.
It said the annual expenditure on bottled water within its establishments had risen significantly prompting a shift to producing supplies for internal use and selling the surplus in the market.
“KPC has sunk boreholes in various stations to cut down on water consumption costs. However, despite sufficient yields from these boreholes, the quality of water does not meet the minimum requirements for drinking water as specified in KEBS quality standard for drinking water” KPC said noting a treatment and bottling plant planned for Morindat would address the challenges.
“KPC also desires to diversify its revenue streams as guided by Vision 2025. Bottled water market remains dynamic with high untapped potential” it added.
The company said the plant would package water in 500-millilitre, 1-litre, and 18.9-litre bottles. The plant will have a capacity to produce 4,000 bottles per hour.
Fibre optic cable
The diversification into the water business comes barely a year after KPC launched its fibre optic cable that will run from the Mombasa port through Nairobi to Kisumu and Eldoret in western Kenya. KPC charges $22(Sh3000.75) per kilometre in addition to a $200(Sh 27,279.62) installation fee per site with a contract duration between 5,10,15, 20, and 25 years.
KPC is also planning to go into the cooking gas business with the construction of a Sh17.7 billion handling and storage plant in Changamwe, Mombasa.
The project will involve the installation of a new LPG facility of 30,000 metric tonnes which will primarily receive LPG from ships berthed at the Kipevu Oil Terminal jetty.
The handling and storage facility will be an upgrade to the current LPG importation, storage, and distribution infrastructure which is aimed at ensuring a robust supply chain and reduced landing costs from economies of scale and elimination of monopolies.
The company posted a pre-tax profit of Sh6.9 billion in the year ended June 30, 2021, which is a 13 per cent increase compared to the same period in 2020. The increase in profitability is mainly attributable to improved throughput performance and cost containment measures by management.
The company's cash reserves went up by 13.8 per cent to Sh9.6 billion compared to Sh8.4 billion at the end of the previous year.
The cash position went up as a result of austerity measures that management undertook at the beginning of the financial year, leading to a reduction in recurrent expenditure costs against the budget.
During the year under review, KPC recorded a six per cent growth in throughput volumes to 8.11 million cubic meters from 7.6 million in 2019/2020. On the domestic throughput front, the figures went up by seven per cent from 4.19 cubic meters for the financial year that ended June 30, 2020, to 4.47 million for the year ended June 30, 2021.
Export volumes also went up slightly by four per cent to 3.63 million cubic meters for the year ended June 30, 2021, compared to 3.49 million for the year ended June 30, 2020. Throughput revenue rose by seven per cent to Sh28 billion during the year under review up from Sh26.1 billion recorded in the financial year 2019/2020.
