the magazine of the petroleum institute of east africa 2...

1

2nd Quarter, April - June 2019

INS

IDE

www.petroleum.co.ke

2nd Quarter, April - June 2018The Magazine of the Petroleum Institute of East Africa 2nd Quarter, April - June 2019

Regulatory Reforms

To Shape Industry’s Future

Petroleum Act 2019

NOCK kicks off its transformation process Hass Petroleum invests in a new LPG

Plant

LPG New Regulations to Curb Illegal

Refilling

2


（）

Global Partners, Grow TogetherTotal, partner of African football#FootballTogether

EGYPT 2019

GOALL!Come celebrate all about football

3


USA

��

��

BEIJING SANKI PETROLEUM TECHNOLOGY CO., LTD is an industrial leading high technology conglomerate.

The main products include Fuel Dispenser, Tank Gauging System, CNG/LNG Dispenser, SF Double-wall Tank,

EV Charger, AdBlue Dispenser, and Mobile Fuel Station.

5251

NACS SHOW ��（Whatsupp）

robertpan

Global Partners, Grow Together

6

4


In this issueIn this issue

Insight from the General Manager 4

11 13

8 9

18Cover story

28Pictorial

32Feature

Statistics 35

Petroleum Industry optimistic of a brighter future

Local Content; a key driver for Kenya’s economic growth

The New Petroleum Act 2019 At A Glance

Upstream sector feels discriminated by the new Petroleum laws

New Petroleum laws an incentive for investors

New Act compliments NEMA regulations

NOCK’s Upstream Mandate a Game Changer in the Energy Sector

Board of Directors

Chairman - Total PLC

Vice Chairman- OLA Energy

Galana Oil Kenya Limited

Gulf Energy Limited

Hass Petroleum Limited

KenolKobil PLC

Kenya Petroleum Refineries Limited

Kenya Pipeline Company

Hashi Energy Limited

Vivo Energy Limited

National Oil Corporation of Kenya

Africa Gas & Oil Co. Limited

Petrocity Energy (K) Limited

Gapco Kenya Limited

VTTI (K) LTD

Tosha Petroleum

East AFrican Gasoil Limited

Stabex International

Riva Petroleum

Kurrent Technologies Limited

Engen Kenya Limited

SGS (K) LTD

Robert Paterson

Varun Sharma

Editorial & Production

Jay and Jey Media Consultants

3rd Floor, Mountain Mall

Thika Superhighway

Tel - 0716 652 011, 0780 652 011

Advertising Agency

Alison and Davis Group Ltd

6th Floor, Town House,

Kaunda Street

Tel - 020 2320083, 0721 845 944

Email: [email protected]

Editorial Board

Wanjiku Manyara and Jennifer Midumbi

Contributors Wanjiku Manyara, Jennifer Midumbi,

Sanjay Gandhi, Daniel Muasya, Gideon

Rotich and Dorice Itebaluk

Petroleum Insight is published quarterly

by the

Petroleum Institute of East Africa.

Views expressed in this publication do

not necessarily reflect the position of

PIEA. All rights reserved.

Petroleum Institute of East Africa Fourth

Floor, Bruce House

P.O. Box 8936-00200 Nairobi - Phone:

254-20-2249081,3313046, 3313047

Mobile: 0722 221120

Fax: 254-203-313048

Email: [email protected] Website:

www.petroleum.co.ke

5


Hass Petroleum has embarked on an ambitious project of

increasing its retail footprint to 188 Service stations in the next two years in the region. The company is also investing heavily in depots, aviation and LPG infrastructure developments.

According to Hass Petroleum Country Manager(Kenya) who also doubles as the Group Business Development

Manager, Mr. Mohamed Billow, the company aims to increase its retail stations from 67 to 188 by December 2020.

“In 2018 the company decided that it must triple its retail networks in Three years. At the start of 2018 we had 67 stations in theregionally and the mid-term goal is to add 121 stations by December 2020 to make it 188 stations. We are also investing heavily in inland depots, LPG infrastructureandthe aviation sector” says Mr. Billow.

Hass Petroleum has in the last 12 months increased its retail network by 48 stations regionally with another 13 approaching their final stages.

Hass Petroleum Targets 188 Stations by 2020

Tel: 020 276 0000 I Email: [email protected] | Website: www.hasspetroleum.com

“We are looking for countries that can give us maximum benefit for our investment such as Zambia, Tanzania, Kenya and Uganda. 60% of our investments will focus on Kenya and Uganda markets” he explains.

Mr. Billow adds that as part of the expansion plan and in conformity with the company’s business tag line of “Servicing New Frontiers,” the company has undertaken to put up stations in remote areas and other parts of the region where leading oil marketing companies have not ventured. “We are taking our products to the remote parts of the region (East & Central Africa as well as the Horn of Africa) especially where the multinationals have shied away, so that every consumer in this region can enjoy our quality petroleum products and services. Our products are not only for the city dwellers but for everyone in the region. We assure our customers of a reliable one stop-shop in all our stations,” he says.

“In the next 5 years we want to have fully fledged company that will deal with the customer directly. We want to minimize our role in reseller market and concentrate our resources in the establishment of retail stations and key consumer accounts” Mr Billow says.

An alumnus of University of Nairobi, Mr. Billow has extensive experience in the oil industry spanning over 11 years. He has been the General Manager for the company’s affiliates in Rwanda, Tanzania and recently Uganda.He holds a Bachelor’s degree in Chemistry and has an ongoing MBA course at Moi University.

Mr. Mohammed BillowCountry Manager (Kenya) & Group

Business Development Manager

6


Energy experts across the world, including the International Energy Agency(IEA)have conceded

that though geopolitics and industry disruptions are confusing the supply outlook,markets haveremained calm, well supplied and oil prices have largely remained unchanged in the ensuing period despite the alarming geopolitical backdrop.

At the same time IEA has predicted that United States(US) will lead oil-supply growth over the next six years due to the incredible strength of its shale industry, triggering a rapid transformation of global oil markets.

It is expected that by 2024, the US will export more oil than Russia and close in on Saudi Arabia hence bringing greater diversity of supply in the markets.

Concerns about the adequacy of world’s energy supply to support the envisioned continued economic growth have been raised by the agency on several occasions, including the 2018 edition of the WEI report.

Interestingly, the findings of the IEA World Energy Investment Report (WEI 2019) indicate a growing mismatch between current energy investment and the global energy supply needs, under both the current policy trends as well as the paths to meeting the Paris Agreement and other sustainable development goals.

Global energy investment totaled more than US$ 1.8 trillion in 2018, a level similar to 2017. For the third year in a

From the General Manager

row, the power sector attracted more investment than the oil and gas industry.

The biggest jump in overall energy investment was in the US, where it was boosted by higher spending in upstream supply, particularly shale, and also electricity networks.

In Kenya, the new regulatory dispensation signals opportunities for investments if implementation of the regulatory instruments takes effect as anticipated, given very specific provisions in the Energy Statues which state that the national government will promote petroleum operations investments of specific interest to note is that the Petroleum Act 2019 requires the national government to create a conducive environment for investments in petroleum operations and infrastructure development, including formulation of guidelines in collaboration with relevant national government agencies, on development of petroleum investments and to disseminate them among potential investors.

In addition, the national government is obligatedto ensure that petroleum operations and infrastructure development are carried out for the benefit of the people of Kenya.

The industry recognizes the steps that the Government through the Ministry of Petroleum and Mining(MOPM) is already taking in guiding the national government on the infrastructure requirements for the petroleum energy sector.

The MOPM has procured a consultant under the Kenya Petroleum Technical Assistance Project (KEPTAP) to develop a petroleum master plan for the Country.

Industry expectations are that this study will comprehensively review the adequacy of the entire petroleum supply chain infrastructure and systems in order to determine the import, storage, transport and distribution infrastructure that is required to cope with the immediate and future petroleum demand locally and ultimately regionally.

We envisage that the outcome of the study will form the template that will guide the national government on critical areas of the petroleum infrastructure that requires expansion and upgrade that’s commensurate to local and regional economic development.

The Petroleum Institute of East Africa (PIEA) is a selected participant in the realization of this effort.

The industry is also looking forward to the formulation of the petroleum policy given the fact that with enactment of the Petroleum Act 2019 the Petroleum sector is expected to have a standalone policy on petroleum operations and a petroleum strategic plan which shall serve as the policy implementation guide.

With the foregoing, it is encouraging to note that the Petroleum Act 2019 has created regulatory structures that aspire to facilitate a predictable business environment for investors.

Wanjiku Manyara

General Manager

Of specific interest to note is that the Petroleum Act 2019 requires the national

government to create a conducive environment for investments in petroleum

operations and infrastructure development, including formulation of guidelines in collaboration with relevant national

government agencies, on development of petroleum investments and to disseminate

them among potential investors.

7


Oil Exploration in Turkana White Oil Pipeline from Mombasa to Nairobi

Petroleum terminal in Mombasa

Kurrent Technologies Ltd. is one of Kenya’s leading integrated Engineering, Health, Safety and Environment (HSE) consulting companies. We provide these services in Sub-Saharan African countries to the satisfaction of our discerning Clients. We invest in our people, systems and technology to provide an unmatched level of service to the energy and mining sectors. We are committed to creating, enhancing and maintaining Client relationships built on a foundation of

trust and excellence.

ENGINEERING

OUR PORTFOLIO OF SERVICES

SAFETY AND FIRE PROTECTION

Project planning and concept studies

Sustainability studies

Field investigation and surveys; maps

Front End Engineering Design(FEED) and

detailed engineering design

Preparation of tender documents

Evaluation of bids

Construction supervision

Project/program management

Quality management

Construction management

Cost and financial management

Contract management

Valuation services

Technical due diligence/appraisals

Failure/forensic investigation

Technical training

Risk analysis and management (Hazard

Operability studies (HAZOPS) and Process

Hazard analysis (PHA), etc

Technical assistance

Institutional development

HEALTH, SAFETY,SOCIAL AND ENVIRONMENT

HSE Legal Compliance

HSSE Management System Development,

Incident Investigation and Root Cause

Analysis

HSSE Auditing

HSSE Risk Assessment

E n vi r o nm e nt a l a nd Soc ia l Imp ac t

Assessment Studies AUTOMATION

Design and specification for full automation of

metering systems

Design and specification for a terminal

automation systems and security systems

Design and specification for a tank gauging

systems

Fire risk assessments including firefighting equipment

reliability

Contractor Safety Management

Incident Investigation and Root Cause Analysis

Permit-To-Work System development

TRAINING AND OTHERS

The company provides a variety of specialized training

courses for the energy and manufacturing sector;

In Kenya, the company is licensed by the NEMA

(Ministry of Environment), DOSHS and NITA (Ministry

of Labor) as a training services provider;

Kurrent Technologies Ltd. is licensed by the IADC in

the USA as an accredited HSE Training Services

Provider for the Upstream Oil and Gas Sector.

Feasibility studies

TYPES OF PROJECTS HANDLED

Crude oil exploration and production

Petroleum terminal and depot (including tank farm and

tankage, bottom and top loading systems, metering systems, piping and pumping systems and fire protection systems, buildings, sheds etc.)

Liquified Petroleum Gas (LPG) depots/terminal/filling

plants

Lube Oil blending plants

Product Blending Systems

Service and filling stations/Retail outlets

Power generation plants (thermal and coal)

Renewable energy (wind, solar, hydro and geothermal)

Power transmission lines

Cross country petroleum pipelines

Liquified Natural Gas (LNG) plants

Firefighting systems

Solar Energy Project in Kenya

Wind Power Project in Northern Kenya

Thermal power plant in Kenya

Small hydro power plant in Kenya

LPG import storage facility in Mombasa

HSE Training Public/Stakeholder consultation in Turkana

Service station in Mombasa Petroleum terminal at Konza

Contacts Hass Plaza, 4th Floor, Lower Hill Road, Upper Hill, P. O. Box 16989 – 00620, Nairobi, Kenya

Tel: (+254) 20 273 0310/3222, Mobile :(+254) 725 499623/738 046569

Email : [email protected] , Website: www.kurrent.co.ke

8

2nd Quarter, April - June 2019IN

DU

ST

RY

NE

WS

The government has cracked a whip on illegal dealers in the petroleum industry across

the country with a view to protecting investments of licensed operators.

Principal Secretary in the Ministry of Interior and National Coordination Karanja Kibicho says the ministry has a special police unit mandated to curb illicit traders and protect investments for legitimate petroleum traders.

“Energy sector is critical to the government and this can be judged by the speed of reaction from government when the sector witnessed some small problem,” says Eng. Kibicho

“We know what this sector means to our economy and not just because of the cars we drive but for our infrastructure growth. There are those in the industry doing illicit trade, depots with adulterated fuel, syphoned fuel we are going very hard on them and fight is still on in order to protect legitimate traders. The government commits to make it harder for people operating outside the rules,” he added.

According to Kibicho key government infrastructure such as Nairobi and Mombasa depots have been gazetted as security areas and accorded high level security.

“We know what it means when that place gets a small accident. We put every effort to secure the place, you may not

Government Assures Petroleum Sector of Safety and Security

see it but be rest assured that the areas that are handling bulk petroleum products are areas that we consider critical infrastructure and there is enough security in those areas,” he says.

The ministry has restructured the Police Service and created special units to pay attention to specific areas of concern in security infrastructure.

PIEA Chairman Olagoke Aluko says multi-sectoral safety and security platform will conduct a risk assessment around the oil storage depots to identify the security gaps in these installations and recommend the mitigation measures required.

“We recognize that our sector security is not a government only responsibility and we consciously acknowledge the real and perceived threats which can only be abated by industry united efforts the industry through PIEA has a structured multi-sectoral safety and security platform, that meets monthly, to ensure that the Legal Notice’s that gazette the Country’s petroleum storage facilities as protected areas are implemented,” says Mr. Aluko.

“We have through this platform scheduled to conduct a risk assessment around the oil storage depots. Our expectation is that this assessment will identify the security gaps in our installations and recommend the mitigation measures required.”

The energy sector has embraced the long-awaited Presidential assent and subsequent publishing of both the Energy and Petroleum Act’s 2019 which will deter malpractices and boost investments in the country.

“The petroleum energy stakeholders are particularly delighted at the imminent regulatory reforms that will be facilitated by the full implementation of the Petroleum Act (PA) 2019. Through this Act, the Regulator has now been sufficiently empowered to effectively regulate our industry autonomously. The applicable fines and penalties are also in place. This should deter malpractices,” says Aluko.

“As you know, a sound regulatory framework is necessary for the stability of the petroleum sector in any economy. This provides a fair and equitable environment for investors, consumers and employees for this reason, the PIEA has continually collaborated with the Ministry of Petroleum & Mining, Energy and Petroleum Regulatory Authority (EPRA) and other agencies, in developing regulatory processes that promote investor confidence, increase wealth creation and ultimately improve economic growth.”

Aluko commended the Government’s fight against illicit trade in Kenya citing non-compliance and lack of enforcement as a key threats to the sustainability of genuine business operations in any country.

“We believe that multi-agency cooperation in clearing out perpetrators of illicit trade is valuable and as a practical example EPRA should only register oil companies which have been vetted and cleared by Government security agencies that fall under the Ministry of Interior & Coordination of National Government. This will not only boost investor confidence but also eliminate the risk of dubious brokers, who have not invested as required, from operating within sensitive and vital Government facilities,” he says.

There are those in the industry doing illicit trade,

depots with adulterated fuel, syphoned fuel we are going very hard on them

and fight is still on in order to protect legitimate traders

Dr Eng Karanja Kibicho, P.S Interior


9


Oil marketer Vivo Energy Kenya in partnership with Hauliers (EA) Ltd

conducted Schools Road Safety Campaign in public primary schools along the Northern Highway Corridor (Mombasa-Malaba) to educate students and teachers on positive behaviour to apply while crossing and walking along the roads.

The road safety campaign is segmented into five parts namely, Traffic lights and what the colours mean for motorists and pedestrian session, Demonstration exercises session, Driver blind spots, how to safely cross the road, and Question and answers session.

The partnership between the two organizations has been in place since 2015 and to date 5,929 students have been trained as road safety ambassadors.

Vivo Energy and Hauliers (EA) conduct

Schools Road Safety Campaign

Select students from

Mazeras primary

school are taken

through a road safety

lesson by Daniel

Mwangi a drivers’

trainer at Multiple

Hauliers (EA) Ltd

Mr Clive Critchlow

and Mr Paul Wanyama

both of Multiple

Hauliers (EA) Ltd

taking the students

of Mazeras Primary

through a question

and answer session

IND

US

TR

Y N

EW

S

8


DU

ST

RY

NE

WS

The National Oil Corporation of Kenya (NOCK) has started a 15-year transformation process aimed at repositioning the state-owned oil marketer as a key player in the

government’s Big 4 Agenda and Vision 2030.

The long - term blueprint is the first of its kind for any state agency in Kenya and is expected to position NOCK as one of the leading integrated petroleum company in Africa and a key driver of Kenya’s economic and social transformation in line with the role played by successful National Oil companies globally.

The development of this Plan is supported by the World Bank through the Kenya Petroleum Technical Assistance Project (KEPTAP) with IHS Markit engaged as the consultants.

NOCK says undertaking of this key milestone will position the company strategically in the emerging oil and gas sector in Kenya and East Africa.

“We have finally kicked off development of our long-term strategic plan. The 15 Year Transformation Plan will be a long-term blueprint to help steer National Oil to become a leading integrated oil and gas company in Africa positioned as one of the key drivers of Kenya’s economic and social transformation” said Ms. MaryJane Mwangi, the oil marketers Chief Executive.

“This is a pioneering assignment never undertaken before by any State entity in Kenya and underlines the commitment of National Oil’s Board and Management to build a company that will be truly transformational for Kenya and one that also provides career fulfilling opportunities for all its staff.”

The state agency which is the custodian of Kenya’s Upstream assets on behalf of Government is keen on enhancing its participation in the sector.

NOCK kicks off its transformation process

The National Oil Corporation of Kenya (NOCK) has committed to plant one million trees in forests

within the Mt. Kenya Ecosystem in the next three years.

The Corporation’s Chief Executive Officer MaryJane Mwangi said the state-owned oil marketer has identified preservation of the Mt. Kenya Water Tower as a key strategic focus in its Corporate Social Investment plan and in line with presidential directive that state agencies actively participate in tree planting.

Ms. Mwangi was speaking when she led staff and local community to plant 10,000 indigenous trees in a 10 hectares’ land in Njuki-ini Forest, Kirinyaga County.

NOCK commits to planting 1 Million trees in three years

The Plan is expected to put NOCK on a trajectory similar to other key national oil companies around the globe.

Some of the most notable National Oil companies that have had significant economic and social transformation in their countries include Petrobras of Brazil, Petronas of Malaysia, Chinese National Petroleum Corporation and Saudi Aramco among others.

Petrobras accounts for five per cent of Brazilian gross domestic (GDP) product of US$ 2 trillion while Petronas accounts for over 20 per cent of Malaysia’s GDP.

Closer home, Sonagol of Angola and Sonatrach of Algeria have been key contributors to the economic transformation of their respective countries leading to both becoming part of the leading oil and gas companies in the world.

“We are very delighted to have joined over 500 local community members from Njuki-ini ward led by a Community Based Organisation, Mt Kenya Green Movement, to plant 10,000 trees. I am informed by the forester in charge that our efforts ensured that Njuki-ini forest has adequate trees to cover the entire forest,” she said.

“Our model is to grow trees, where other than just planting, we take care of the trees for a period of three years to ensure 95 per cent survival rate. In the next three years, National Oil will grow 1 Million trees with Mt. Kenya ecosystem.”

She added that Corporation has taken up tree planting to not only empower communities but also its big strategic

NOCK Chairman Mr. Kibuga Kariithi (c) with CEO Ms.

MaryJane Mwangi (3rd left) after signing a contract with

IHS Markit kicking off the development of National Oil‘s

15 years‘ Transformational.

agenda to transform Kenyans from using biomass sources of cooking energy to Liquefied Petroleum Gas (LPG). “We also had a great opportunity to educate the community on the need to transform to use of gas for cooking in an effort to provide a long-term solution to deforestation. LPG is affordable, convenient and plays a key role in reduction of respiratory ailments. We demonstrated the safety use of gas for cooking as well as opportunities that the community can take up to empower themselves through SupaGas brand of LPG” said Mwangi

NOCK plans to plant more trees in forests within Embu, Nyeri, Meru, Kirinyaga and Laikipia counties.

9


LIQUIFIED PETROLEUM GAS (LPG) COURSES

CODE COURSE TITLE Duration Dates

SPS 014 LPG Installers 3 days 2 – 4 September 2019 (Nairobi)

OIL AND GAS SUPPLY AND DISTRIBUTION COURSES


SPS 015 Petroleum Depots Operations and Distribution Management 5 Days 15 - 18 October 2019 (Nairobi)

SPS 023 Supply Planning Optimization in the Oil and Gas Sector 5 Days 12– 16 August 2019 (Nairobi)

OIL AND GAS RETAIL AND MARKETING COURSES


SPS 018 Service Station Attendants Course 5 days 22 - 26 July 2019 (Nairobi)

SPS 019 Service Station Management Course 5 days 26 - 30 August 2019 (Nairobi)

HEALTH, SAFETY, ENVIRONMENT AND QUALITY MANAGEMENT COURSES


SPS 003 Contractor Safety Management (Module 1) 5 days 1 -5 July 2019 (Nairobi)

SPS 035 Oil and Gas Fire Marshals/Wardens Training 3 days 4 - 8 November 2019 (Nairobi)

OIL AND GAS TRANSPORTATION COURSES


SPS 007 East Africa Oil and Gas Transportation Management 5 days 23 - 27 September 2019

(Nairobi)

SPS 016 Petroleum Road and Transportation Management 5 days 18 - 22 November 2019

(Nairobi)

OIL AND GAS LEGAL REGULATORY FRAMEWORK COURSES


SPS 029 Oil and Gas Corporate governance for Boards and Management

Conference

1 day 23 October 2019 (Nairobi)

LUBRICATION AND AVIATION COURSES


SPS 011 Lubricants and Lubrication (Module 1) 5 days 16 - 20 September 2019

(Nairobi)

SPS 002 Aviation Operations 5 days 5 - 9 August 2019 (Nairobi)

PROJECT MANAGEMENT COURSES


SPS 017 Project Management in the Oil and Gas Sector 5 days 2 - 6 December 2019 (Nairobi)

5 DAYS COURSE CHARGES: PIEA Members Ksh. 49,000 + VAT

Non Members Ksh. 62,500 + VAT

3 DAYS COURSE CHARGES: PIEA Members Ksh.35, 000+VAT

Non Members Ksh.40, 000+VAT

TRAINING CALENDAR, 2019

Additional Information:

2 DAYS COURSE CHARGES: PIEA Members Ksh.25, 000+VAT

Non Members Ksh.30, 000+VAT

1 DAY COURSE CHARGES: Subject to discussion depending on the

course

10


DU

ST

RY

NE

WS

Delta Kiserian

Galana Oil Kenya Expands its Retail Network

Delta Athi river

Kenya Ports Authority (KPA) has confirmed the appointment of Dr Arch Daniel Manduku who was previously serving in an acting capacity.

The new managing director’s main focus is to improve the performance of the port to a world class level in order to facilitate international trade.

Interview excerpts with the P.I magazine.

Q. Congratulations on your new appointment

as an MD. What was your reaction to this

development?

A. I received the news as a blessing knowing that KPA is a bigger challenge for me in my career. I had always looked forward to a more challenging job and of course more recognized job locally and internationally.

Q. Briefly tell us about yourself, career and

education background.

A. I am an Architect by career and profession holding a Doctor of Philosophy (PhD) in Architectural Engineering. I have largely worked in the construction field where I rose to become the Managing Director of the Construction Authority of Kenya. But here I’m, venturing into the maritime sector.

Q. What are your immediate priorities as the

new MD?

A. My priority as new MD is to understand the maritime and particularly the Port sector with a view to improving performance. This I believe I will achieve when I have the support of all staff and management of KPA. So far I have largely succeeded.

When I took over the management of the Port, the container population in the yard was about 23,000 teus. My first strategy was to sit at the container terminal offices to get the issues first hand. Then I had several meetings with the operations team, agreed on a system of proper utilization of resources and manpower.

KPA’s New MD eyes improving port’s

performance

footprint and offer diversified services to all customers.Delta Fuel stations offer a variety of services and are designed to meet all motoring needs and provide a convenient shopping experience in the Delshop stores located within the stations.

We also started a duty roster for all senior management staff in the port, where we put one person in-charge in every shift. This helped us to point out issues and ideas that operations staff were not seeing at once.

We managed to reduce the yard population to 14, 163teus within two months of my appointment. I’m also happy to report here that since we implemented these measures, we immediately started breaking our own records of ship performance at the terminal four times. Mv. Ever Dynamic did 1,262 moves in 8hours, and 23,320 moves in 24hours. This broke the earlier records of 117moves per 8 hour shift and in 24hours.

This performance means we can offload 157containers in one hour for 4 cranes, equivalent to 40moves per crane hour. International standards are at 30moves per crane hour. We have actually worked hard to sustain this performance.

Q. What is your vision for Kenya Ports Authority?

A. Kenya Port Authority (KPA) manages all the seaports and inland waterway ports in Kenya. KPA’s vision is World class ports of Choice. We want all ports under KPA to perform at world class level to facilitate international trade, and support vision 2030 and the big four agendas. It is for this reason that we are doing huge investments in the sector.

Q. What are some of the salient issues that you feel strongly about

that you would like to address during your tenure?

A. The shipping industry is very dynamic and customer needs are also dynamic. To satisfy customers we need a very responsive workforce that takes customers as the kings they are.

So, I would like to enhance change in management to change the attitude of our people to be more customer focused. We currently have a programme called ‘Wajibika’ on this running together balanced Scorecard for performance management.

KPA’s New MD eyes improving port’s

performance

Galana Oil Kenya Limited through its Delta Retail Brand recently opened two new state of the art fuel stations in Athi River and Kiserian.

According to James Nginya the Head of Corporate Affairs & Strategy, this is part of the company’s strategy to grow its retail

Dr Arch Daniel Manduku

KPA Managing Director

11


IND

US

TR

Y N

EW

S

Cabinet Sectetary Ministry of Petroleum and Mining Mr John Munyes

11

The policy is aimed at enhancing LPG uptake among Kenyan households.

The government plans to construct a liquefied petroleum gas (LPG) common user import handling and storage facility at the port of Mombasa and Nairobi in bid to

increase the uptake and penetration of the commodity.

Currently, the uptake of LPG amongst Kenyan households remain minimal with official government data showing that 97 per cent of households still use traditional sources of cooking energy with five per cent relying on e kerosene as primary source of fuel.

Cabinet Secretary in the ministry of Petroleum and Mining John Munyes said the government has made significant strides in encouraging the private sector to invest in LPG facilities and particularly the import and storage facilities at the port of Mombasa to meet the growing LPG demand which currently stands at around 300,000 metric tonnes per annum.

“The Government has plans to construct the LPG common user import & storage facility in Mombasa which will allow for importation of bulk LPG in economic batches, also in progress are activities towards the provision of LPG bulk storage facilities in Nairobi both of these projects will access LPG at least cost. We need to increase LPG import/storage facilities in Mombasa to 25 KT in the short to medium term and to 50 KT in the long term” Mr. Munyes said.

“Increase in LPG consumption will significantly move the country towards achieving vision 2030 and support the Big 4 Agenda given that it has the potential to increase local manufacturing of LPG cylinders which will create jobs as well; eliminate the burden of non-communicable diseases hence increase universal health care and enhance afforestation efforts thereby reducing adverse impact of climate change thereby boosting food security,” he added.

He said the government targets to provide a conducive well-regulated business environment for LPG marketers to increase their safe cylinder investments from the current 4 million to 18 million.

“We are aware that the LPG demand cannot be met without sufficient numbers of safe LPG cylinders in the market. It is for this reason Government supported an LPG cylinder enhancement project ‘Mwananchi LPG project’ whose objective was to enhance LPG uptake and penetration through

GoK to invest in LPG Common user facilities in Mombasa & Nairobi

deployment of cost subsidized safe cylinders for new household LPG connections,” said Munyes.

He noted that the government through the Energy and Petroleum Regulatory Authority (EPRA) is finalizing on the legal notice No. 121 that will see several regulatory reforms take effect that include the LPG Cylinder interchange which is expected to give investors’ confidence and result in the deployment of safe cylinders through increased distributer networks managed by brand owners, retention of unified valve to promote consumer convenience, safety, LPG operations flexibility and market competitiveness.

“Legal notice 121 will require brand owner to have the full capacity and capability to ensure that the cylinder is safe before and after refill and before it is supplied to the consumer. Further, the cylinder liability & responsibility shall remain with the brand owner, these necessitates the brand owner to take appropriate measures to prevent potential accidents and ensure consumer safety at every point during the life cycle failure to which the regulator can suspend or terminate the relevant license. The new law clearly maintains that the cylinder will be owned by the brand owner” said Munyes.

He further stated that licensing criteria must address all loopholes and omissions that have impeded the realization of a regulatory framework that promotes a conducive business environment and growth of the LPG segment some of which are provided for in the Petroleum Act 2019.

It must also include enhanced fines and penalties which are a deterrent to unscrupulous business persons who want to engage in LPG malpractices.

“The Regulator’s powers have been enhanced and its monitoring and enforcement capacity has been expanded to ensure compliance by all LPG players. Therefore, the adjustment of minimum entry cylinders proposed in the license requirements from 30,000 to 5,000 would not be abused by unscrupulous players by illegal refill and/or rebrand of other brand owner’s cylinders” said Mr. Munyes.

“On the regulatory reforms front, the coming into force of Legal Notice 121 in the near future and its Parent Statute Petroleum Act 2019 are sufficiently robust to provide a legal and regulatory framework that exudes confidence to you as investors and our hope is that you will invest in LPG so that we jointly can finally fully unlock access to cleaner, modern, safe and efficient household petroleum energy in Kenya and the region as a whole.”

Increase in LPG consumption will significantly move the country towards achieving vision 2030 and support the Big 4 Agenda given that it has the

potential to increase local manufacturing of LPG cylinders which will create jobs as well

12


DU

ST

RY

NE

WS

The Petroleum Institute of East Africa (PIEA) and Energy and Petroleum Regulation Authority (EPRA) have launched new Liquefied Petroleum Gas (LPG) regulations in Kenya

that will see the abolishment of mandatory cylinder exchange pool in a bid to weed out illegal re-fillers

In the new regulations, brand owners are solely responsible for their cylinders’ safety and are at liberty not to accept other brands during refill, meaning consumers can only return their cylinders to retailers acting for the brand marked on the cylinder.

According to EPRA Director General Pavel Oimeke, the new regulations aim to enhance safety for LPG users by making brand owners liable of their cylinders.

“The new regulations will end cylinder interchangeability in the LPG market and make marketers 100 per cent responsible and liable for the safety of every LPG cylinder. We believe we have now moved an enormous roadblock to the uptake of LPG in Kenya, and with it solutions to other problems too,” says Mr Oimeke.

The LPG Regulations of 2009, which required a unified valve and mandatory exchange of cylinders, increased access to cooking gas in the country but had the unintended consequence of fuelling illicit trade, thus hindering new investments in LPG cylinders by Oil Marketers that ended up in the informal market.

“We had in place a structure that was limiting investment and costing us lives in its own right, as LPG safety got smothered in a parallel and unregulated market that allowed a gas cylinder brand to be changed for that one of a rival and this saw marketers lose track of their cylinders” says Oimeke.

“Cleaning up the LPG market, it turned out, was a vital precursor to cleaning up the fuel sources in Kenyan homes. Nor was it

New LPG Regulations to Curb Illegal Refilling

right that Kenyans should be choosing between death from smoke, or the risk of leaking and exploding gas – we needed to revisit the whole LPG market, its safety, and its investment levels, and put in place the conditions for the market to thrive and for safety to be a guarantee.”

Oil marketers say the new regulations will help clamp down on illegal refilling and bring sanity to the industry.

According to the PIEA Chairman Olagoke Aluko an estimated 90 percent of all cylinders owned by major licenced LPG markers are never returned and remain in the parallel market continuously being illegally refilled and resold to consumers.

Mr Aluko says very low proportion of cylinders returned to brand owners discourages brand owners from investing in new cylinders, leading to shortages of safe cylinders.

The new regulations allow brand owners to voluntarily form mutual partnerships with other brands for cylinder exchange at the point of sale but with the approval of Kenya Competition Authority to avoid a few OMC’s forming an exchange pool and shutting the rest out.

Distributors and retailers will enter into contract with OMCs to sell and refill their branded cylinders which was not the case previously.

These new regulations come at a time when the government aims to transform 42 per cent of Kenyan households to LPG as an alternative clean cooking fuels.

Approximately 74 per cent of the country’s population lives in rural areas and rely on bio fuels such as charcoal and firewood for cooking, heating and lighting that cause respiratory diseases.Cooking with firewood generates pollution in homes on a nearly unprecedented scale.

According to a recent study, cooking a single meal with firewood is equivalent to smoking 400 cigarettes per hour.

“The consequence is that an estimated 21,650 Kenyans die every year from air pollution, while at least 40 per cent of child deaths are caused by respiratory illness as a result of children inhaling the smoke that is emitted from charcoal and wood stoves during cooking,” says Oimeke.

“Beyond the severe health costs of our existing dependency on firewood, we are suffering environmental costs too, which are just as grave. We are badly short of forest cover, and that impacts our water catchment. Thus, the move to LPG will save lives in every possible way, through cleaner lungs, fewer illnesses, larger forests, and more water for everyone.”

EPRA Director-General Mr Pavel Oimeke speaking to the press

during the launch of new LPG regulations awareness campaign.

we needed to revisit the whole LPG market, its safety, and its investment levels, and put

in place the conditions for the market to thrive and for safety to be a guarantee

13


Hass Petroleum invests in a new LPG PlantC

OV

ER

ST

OR

YIN

DU

ST

RY

NE

WS

The Uganda Association of Consulting Engineers (UACE) hosted the annual I Group of African Members Associations Conference (GAMA) 2019 in Kampala this

May.

GAMA is a regional grouping that is affiliated to FIDIC ((Fédération Internationale Des Ingénieurs-Conseils). It represents the consulting engineers’ fraternity in Africa.

According to the FIDIC - GAMA Chairman and Chief Executive Officer, Kurrent Technologies, Eng James Mwangi, GAMA currently comprises of 16 member associations and has been in existence since 1993.

The conference whose theme was; the role of consulting engineers in driving growth in African economies was graced by the Vice President of Uganda Hon. Edward Kiwanuka Ssekandi, the Minister of Works and Transport Uganda (Proposed), Hon. Monica Azuba Ntege, Executive Committee Member of FIDIC, Ms Aisha Nadar, Managing Director of FIDIC, Dr. Nelson Ogunshakin OBE, UACE Chairperson, Eng. Betty Nakamya, Members of the Executive Committee/Associations of GAMA and stakeholders.

In his key note address, Eng Mwangi highlighted the challenges that Africa faces in its development agenda one of the major one being inadequate infrastructure. He noted that infrastructure opens up trading routes, trading facilities and developing manufacturing and production facilities.

“Infrastructure supports delivery of social services all geared towards uplifting the lives of the people. It enhances

Uganda hosts a successful FIDIC – GAMA conference 2019

collaboration, opens up frontiers, allows free movement of people and greatly contributes to enhancement of awareness among other positive attributes,” the FIDIC - GAMA Chairman emphasized.

Further, he observes that despite the challenges, Africa has become an attractive destination for investors, lenders, engineers and other professionals looking for opportunities in infrastructure. The role played by Africa’s consulting engineers whilst important is still below expectation. Eng Mwangi challenged his peers to take positive steps to change the potential history of African infrastructure being built by outsiders. He added that Africa’s infrastructure agenda is well articulated in Africa’s Agenda 2063.

The Kurrent Technologies CEO who is also a Petroleum Institute of East Africa director assured infrastructure players including governments, funding agencies, regulators, universities, insurers and the private sector that consulting engineers are ready to play their part to make the African continent the best place in the 21st century.

“We must execute our work with a deep sense of commitment serving the greater good of the people living in Africa. We as engineers must fully understand how privileged we are to have gone through school and obtained good engineering education and even more, to have gained engineering experience and lived in this time. We must always understand how important our work is in uplifting the lives of the people of Africa,” Eng Mwangi added.

Hass Petroleum is constructing a new Liquefied Petroleum Gas (LPG) plant along Nanyuki

road, Industrial Area, with additional investments in new composite cylinders with enhanced security features.

According to the company’s General Manager Specialities, Mr Ahmed Yunis, the composite cylinders can easily be moved as they are light in weight when filled or empty and don’t explode when exposed to fire unlike the metal ones.

“The company has introduced light safe ‘composite’ cylinders. These cylinders have a unique quality which don’t exist in the metal cylinders. One, it’s very light in weight when empty and filled with LPG making it easy to carry; Two, it doesn’t explode when exposed to fire and has a

Hass Petroleum invests in a new LPG Plantchild-lock, and three its transparent, so a consumer can see the amount of gas they have in the cylinder. With the new plant and new LPG cylinders we are able to serve our bulk and cylinder -based customers in a more efficiently” said Mr. Yunis.

He said the new LPG regulations were long overdue for the industry that had been overtaken by illegal re-fillers but was quick to point out that without proper implementation and enforcement by mandated government agencies the new Act will just be pieces of paper.

“The new LPG regulations are the best thing that has happened in this country. This market has been denominated by illegal refillers who don’t care about anything and refill any cylinder

irrespective of whether its theirs or not. These regulations have stiff penalties which act as a deterrent to unlicensed operators. Therefore, it will create some sanity in the market and give confidence to legal and licensed brand owners” said Yunis

“On the flip side, if there is no proper enforcement from the authorities concerned then it is as good as the way it is written. If there is no enforcement the trend will continue, but if there is proper enforcement from government agencies, the Act will create an equal level playing ground which is good for legitimate business. If this Act is properly operationalized and strictly implemented to the latter, I assure you there will be a lot of investments both in cylinders and other LPG infrastructure.”

Eng. Mwangi shaking the hand of Uganda V.P as

FIDIC CEO watches

14


DU

ST

RY

NE

WS

Tanzania was host to the 6th African LPG Summit and Expo that brought together expertise and delegates from all over the

world.

While officially opening the summit at Dar es Salaam, the Minister for Energy, Hon. Dr. Medard M Kalemani outlined the opportunities for both local and foreign investors in the Liquefied Petroleum Gas (LPG) sector.

He said that the Tanzanian government is transiting its population, especially those in the rural areas that heavily rely on bio fuels such as firewood, charcoal and kerosene for cooking and lighting to clean, affordable and modern energy LPG.

This, he said, can only be achieved by establishing joint storage facilities and filling plants by industry players all over the country.

“The Government is urging and encouraging industry players to establish joint facilities in particular storage facilities and filling plants all over the country. It necessary for local communities to transit to clean, affordable and modern energy and that LPG should be part of the clean cooking fuel energy mix” said the minister.

“There is a need to move the LPG business from urban areas into the villages and more rural parts of the country as this is where deforestation is greatest and that there is the highest potential for use to move away from charcoal. What is needed is a win-win situation for both the private sector and the government, so that people of Tanzania can be the ones who reap the greatest rewards from the use of LPG”.

Summit’s experts included ErastoMulakazi, Ag Director, Petroleum Bulk Procurement Agency (PBPA); Michael Kelly, Deputy Managing Director, Global LPG Partnership; Rabia Abdalla Hamid, Director, Economic Regulation, Zanzibar Utilities Regulatory Authority (ZURA), Wanjiku Manyara, General Manager, Petroleum Institute of East Africa (PIEA); Elizabeth Muchiri, Country Manager Kenya, Global LPG Partnership; and Platinum event sponsor, Benoit Araman, Managing Director, Oryx Energies Eastern and Southern Africa.

The 6th African LPG Summit was held in Dar es Salaam for the second time in 3 years and featured more than 50 exhibitors from all over the world. The two-day exhibition showcased products and services for the enhancement, growth and proliferation of the LPG business in Tanzania.

Dar hosts 6th African LPG Summit

There is a need to move the LPG business from urban areas into the villages and more

rural parts of the country as this is where deforestation is greatest and that there is the highest potential for use to move away from

charcoal. What is needed is a win-win situation for both the private sector and the government, so that people of Tanzania can be the ones who reap the greatest rewards from the use of LPG

Hon. Dr Medard M Kalemani, Tanzania Minister for Energy

From L-R Hon. Dr Medard Kalemani Tanzania Minister for Energy, Mr. Erasto

Mulakazi Executive Director Petroleum Bulk Procurement and Mr Alaine

Deleuse International Business Development LPG, MannTek.

15


CO

VE

R S

TO

RY

IND

US

TR

Y N

EW

SThe Government’s move to introduce anti-adulteration levy in September 2018 has made significant contributions towards eliminating the adulteration of motor fuels using

illuminating kerosene.

Statistics on the consumption patterns of illuminating kerosene indicate that its usage has dropped by 69 per cent from 41,473.51m3 in January 2018 to 12,766.56m3 by December 2018.

This drop can be attributed to the slump in the motor fuels adulteration after elimination of the economic incentive that existed in the past due to tax differential between motor fuels and illuminating kerosene.

However, recent industry examination by the Authority have revealed the danger of motor fuels adulteration by use of aviation fuel commonly known as “Jet A1”.

The availability of this type of fuel still portends an inherent risk to the quality of motor fuels in the country because the product has a lower tax bracket and cannot be bio-coded for safety reasons. The undisputed need for stringent controls in the distribution of Jet A1 is therefore inevitable.

The Energy & Petroleum Regulatory Authority (formerly ERC) is thus in the process of rolling out new licensing requirements for Jet A1 traders and suppliers in order to further tighten controls in the product’s supply chain.

This move is also in support of one of the objectives of the Energy Committee of the National Assembly which is curbing motor fuel Adulteration by use of the aviation fuel.

Additionally, the Authority has constituted a Technical Committee with representation from both the Government and the oil industry where various aspects in the Jet A1 supply chain have been deliberated on and concluded.

Other key issues are also under deliberation and consideration by the Authority key among the technical Committee’s recommendations is the creation of a specific license category for local Jet A1 dealership at the Country’s airports.

This will be a departure from the present situation where local Jet A1 dealers are required to possess a general license for Export and Wholesale of Petroleum Products (Except LPG).

The new license category will enable easier traceability of Jet A1 volumes from import to consumption since trading in the product will now be specialized.

The Authority has also embarked on stringent Jet A1 data verification mechanisms to ensure that every litre in the product’s value chain is accounted for.

Through this process, the Authority will eliminate diversion of Jet A1 for use as a motor fuels adulterant further, the Authority has created a special license category for transportation of Jet A1 by road.

Once licensed, the Jet A1 transporters will be issued with permits in form of stickers for each transportation vehicle. The transporter will also be required to ensure that their drivers have been certified to transport Jet A1.

Moreover, the Authority has changed the procedure for loading of Jet A1 whereby the Oil Marketing Company (OMC) loading the product is obligated to report to the Authority through Supplycor of its intention to load Jet A1 and the registration numbers of the transportation vehicles earmarked for the task.

The OMC is required to provide the information on Jet A1 loadings to Supplycor before 0900hrs daily for collation and onward forwarding of the consolidated list to the Authority.

In conjunction with other Government agencies, the Authority has put in place a mechanism for tracking all Jet A1 loaded vehicles to ensure that no diversion of the product occurs en-route the destination.

Plans by the Authority to amend the Energy (Licensing of Petroleum Road Transportation Business) Regulations, 2013 in order to ensure that petroleum road transportation vehicles including those transporting Jet A1 are fitted with Global Positioning System enabled tracking systems are in top gear. This will ensure real time tracking of movement of Jet A1 transportation tankers.

Other quality assurance measures that the Authority has put in place in the supply chain include a requirement for all dealers in Jet A1 to possess a valid lease agreement with owners of plane refueling equipment and to maintain a general third-party liability insurance.

The traders and suppliers will also be required to meet the requirements for licence of Import, Export and Wholesale of Petroleum Products (Except LPG) as issued by the Authority.

The Authority is also working closely with the oil industry and the Kenya Pipeline Company Limited, to actualize the automation of the hydrant system at Jomo Kenyatta International Airport (JKIA) and Moi International Airport (MIA).

This will result in the installation of a Hydrant Monitoring System (HMS) at the two airports in a bid to further enhance Jet A1 volume movements and thereby reduce losses while ensuring efficiency in the Jet A1 value chain.

The Authority has been and continues to run campaigns on media to stop the vice of fuel adulteration use of adulterated motor fuels leads to excessive engine wear, loss of engine power, excessive exhaust smoke due to incomplete combustion and in some instances complete engine stalls.

As a result, consumers suffer increased maintenance costs while the wider public suffer from pollution. Further, sale of adulterated motor fuels results in low tax fuels for instance Jet A1 being sold as high tax fuels such as diesel thereby denying Government millions of shillings in tax revenue.

EPRA outlines additional controls in the supply chain of aviation fuel

15

16


DU

ST

RY

NE

WS

Dr Arch Daniel Manduku

KPA Managing Director

The Kenya Ports Authority (KPA) has embarked on major projects outlined in its 30-year Master Plan

(2018 – 2047) with a view to enhancing the performance of the petroleum sector.The implementation of the projects is expected to improve efficiency in the petroleum sector in line with the Petroleum Act 2019.

These projects include Kipevu Oil Terminal, Second container Terminal phase II, Lamu Port construction and the Construction of Cruise Passenger Terminal.

“The KPA Master Plan has outlined a number of projects that aim at improving the handling of petroleum products and we have had discussions with stakeholders in the sector,” said Daniel Manduku, the authority’s managing director.

“These include the relocation of KOT and construction of oil jetty at the Lamu Port. We are relocating the Kipevu oil terminal to a site where we will be able to berth four huge tankers at a time. We shall also have facilities for the export of oil from the region. The terminal will also have a gas handling point to support the industry.”

Dr Manduku said the authority is in talks with Kenya Pipeline Company(KPC) and other stakeholders in the oil sector to increase the tank sizes for storage(ullage).

“This will enable us fully realize the benefits of the expanded facility through faster handling of oils. It will also save on costs by reducing ship waiting time as it happens today where ullage is very low,” he said.

According to Manduku the relocated new island oil terminal comprises of:• One offshore island terminal with

four berths capable of importing and exporting five different hydrocarbon products; crude oil, HFO - heavy fuel oil and three types of white oil products; DPK – aviation fuel, AGO – diesel and PMS – petrol with 4 berths.

• fourberthsshallinitiallyaccommodatevessels up to 100,000 to 120,000

KPA eyes mega projects to boost growth of the petroleum sector

DWT, which requires dredging to a level of -15 m LAT.

• two berths; Berths 1 and 2; shallaccommodate handling of the three white oil products as well as handling of heavy fuel oil and crude oil products; Both Berth 1 and 2 shall be fitted with topsides and marine loading arms.

• Two berths; Berths 3 and 4; shallaccommodate handling of the three white oil products only. Only Berth 3 shall be fitted with topsides and marine loading arms, and Berth 4 be prepared only for future fitting, when required.

• Twoberths;Berths2and4;shallbedesigned to accommodate vessels up to 170,000 DWT, which requires future dredging to a level of -19 m LAT (pre-investment for future expansion).

• Breastingandmooringdolphins.

• One central platform with offshorelanding arrangement for crew, supply vessels and smaller barges being connection point for subsea pipelines, risers and topsides.

• Offshore centre of operations at thecentral platform including operators’ accommodation and control desk facilities and utilities.

• Twoloadingplatforms,eachtoservetwo berths.

• Supportplatforms/dolphinsfortrestlebridge sections.

• Gangways, walkways, utilities andsupplies.

“KPA’s port of Mombasa handles all commodities both imports and exports for the region. It is for this reason the authority has provided facilities to handle the petroleum oil and gas through the Shimanzi and Kipevu Oil terminals,” said Manduku

“Although the facilities are under KPA, we have largely left the Petroleum sector to control the operations of the facilities under our watch and supervision. In total we handle over 7million tones liquid petroleum cargo each year. KPA also has a robust oil pollution section that works closely with the petroleum sector to prevent and combat oil pollution should it happen. So we work closely with the sector.”

According to Manduku the region has discovered vast reserves of oil and gas that need to be handled well and to reach the markets abroad.

“In this regard we are putting massive investments to improve our facilities as well as to put up new facilities to handle these products. Already the construction of KOT is underway and the first three berths at Lamu port are at 63 per cent complete. We urge the KPC to complete the pipeline so we can properly serve the region,” he said.

We are relocating the Kipevu oil terminal to a site where we will be able to berth four huge tankers at a time. We shall

also have facilities for the export of oil from the region. The terminal will also have a gas handling point to support the

industry.”

17


CO

VE

R S

TO

RY

RE

GIO

NA

L N

EW

S

Tanzania and Zambia plans to construct refined products pipeline to transport petroleum between the two countries

at a cost of $1.5 billion.

Tanzania, Zambia to construct $1.5 billion

oil products pipeline

The Republic South Sudan government is wooing Russian government and other investors to

invest in the country’s oil and gas sector.

Speaking during the Saint Petersburg International Economic Forum, Republic of South Sudan First Vice-President Mr Taban Deng Gai said that in order to attract more investments in the country, the government is committed in maintaining peace and security for its people and investors.

“With the resumption of peace and security, the government of the Republic of South Sudan has been especially active in attracting investment to the country. These efforts are proving successful: we have recently signed a second Exploration & Production Sharing Agreement for our biggest oil block last month, and are proud to have welcomed sizeable new entrants into our oil licenses over the past few years. We are proud to count Rosneft and other Russian energy companies as the partners of the rebuilding of South Sudan’s economy and oil industry,” said Mr Gai.

South Sudan Woos Russian Investors

He stressed on the importance of the Russian support to South Sudan’s political stability and economic prosperity and welcomed Russia’s various initiatives to strengthen its dialogue with Africa this year and invited more Russian companies to invest in South Sudan.

“We have committed to long-lasting peace, prosperity and security for our people, and have emerged as a true African and global frontier of opportunity where everything is possible and the prospect of building a new world has become a reality,” he added.

Talking about the importance of South Sudan’s cooperation with Russia when it comes to energy and oil and gas, Taban Deng Gai highlighted the numerous investment opportunities offered to foreign investors within South Sudan’s oil industry. These include blocks B1, A1 to A6, E1 and E2, but also opportunities in pipeline infrastructure to the Indian Ocean, and in downstream infrastructure with the Safinat Refinery.

“We welcome Russia’s support and engagement in South Sudan across the

value chain, including when it comes to sharing experiences on local content and developing capacity building programmes for our engineers” said the First Vice President.

He invited Russian companies and investors to participate in the upcoming South Sudan Oil & Power Conference in Juba from 28-30 October 2019.

The pipeline would run from Dar es Salaam to Zambia’s mining city of Ndola.Tanzania’s Energy minister Mr said Medard Kalemani that Zambia’s Africa’s top copper producer, imports most of its petroleum requirements mainly from the Middle East, through the port of Dar-es-Salaam in Tanzania.

Mr Kalemani said the pipeline would run from the commercial capital Dar es Salaam to Zambia’s mining city of Ndola, some 1,349 km away.

Speaking in Tanzania’s administrative capital Dodoma, the Energy Minister said that feasibility study will be completed by the next fiscal year and project kick off thereafter.

“The project will be implemented jointly by Zambia and Tanzania and targets to reduce challenges in transporting petroleum products in the countries that use our ports to import fuel and open up business opportunities” he said.

The new refined products pipeline will run parallel to the existing crude oil pipeline that transports crude oil to Zambia where it is refined in Ndola for local use.

Zambia imports most of its petroleum requirements through the port of Dar-es-Salaam in Tanzania.

We have committed to long-lasting peace, prosperity and security

for our people, and have emerged as a

true African and global frontier of opportunity

where everything is possible and the

prospect of building a new world has become

a reality

Hon. Dr Medard M Kalemani

Tanzania Minister for Energy

18

2nd Quarter, April - June 2019C

OV

ER

ST

OR

Y

Mr Olagoke Aluko, PIEA Chairman

Petroleum Industry optimistic of a brighter future

The petroleum industry is hopeful of improved business environment once the Petroleum Act 2019 comes into force.

In an interview with Petroleum Insight, the Petroleum Institute of East Africa (PIEA) chairman Mr. Olagoke Aluko says industry stakeholders are happy to see that the Act provides for development and publishing of a National Petroleum Policy and Plan which lays the foundation for the development of the Petroleum sector.

Excerpts:

QBriefly give us your take on the Petroleum

Act (PA) 2019

A. The Petroleum Act (PA) 2019 represents a significant milestone for the Government of Kenya (GoK). It aligns the legal framework to international best practices and the Constitution of Kenya (2010). The Petroleum Act consolidates the entire petroleum value chain (Upstream, Midstream and Downstream) and it has become the principle substantive law.

As an industry, we are happy to see that the Act provides for development and publishing of a National Petroleum Policy and Plan which lays the foundation for the development of the Petroleum sector. In addition, the Act seeks to improve the business environment by creating room for enhanced regulation, consideration for the environment as well as local content development and capacity building.

It substantively provides for development of numerous regulations for the downstream sector. This includes determining of maximum wholesale and retail prices, tariffs for common user facilities, OTS operations, licensing and standards guidelines, minimum operation and strategic stocks, provision of a National oil spill plan, business dealings in lubricants and handling of petroleum products in aviation just to mention a few.

The act has established a Regulator for the industry whose role is to regulate, monitor and supervise petroleum operations in Kenya.

The current Energy Regulatory Commission automatically transitions to the Energy Petroleum Regulatory Authority (EPRA). Key to note is that although all matters of petroleum are covered in the Petroleum Act, the composition, functions and powers of the Authority are contained in the Energy Act, 2019.

QHow will the PA 2019 affect the way of doing business

in the Country? Will it facilitate business, make it easier/

more predictable for investors?

A. Certainly, this Act is geared towards making doing business in Kenya easier and competitive. It should help in boosting investors’ confidence and fast tracking the Oil sector development in Kenya and by extension the East African region. Evidently, a new legal framework puts Kenya at the fore front of managing their emerging Oil and Gas sectors where capacity is still limited. All business segments within the Oil sector are poised for regulatory reforms to ensure there is a level playing field, efficiency and order for sustainability of investors. I applaud the GoK and all stakeholders who were involved in the drafting of this new law because it now positions Kenya in its trajectory of achieving economic gains derived from the Oil sector. It is important to note that Enforcement is key.

QWhat change is the industry anticipating during

transition to the PA 2019?

A. The industry expects the Energy and Petroleum Regulatory Authority (EPRA) to play a central role in managing this change. We anticipate significant reforms in the sector and stringent enforcement of the regulations which would lead to the creation of a level playing field in the industry and the disappearance of non law-abiding entities. We are satisfied to see that offences have been categorized as economic crimes. This will deter and minimize the rampant abuse that has prevailed in the sector for many years.

It is commendable to see that the Act has comprehensively addressed issues relating to Health, Safety and conservation of the environment. Issues such as occupational safety, environment compliance, waste management, property maintenance, venting and flaring, reporting accidents, emergency preparedness and pollution. The Industry would like to see the implementation of designated parking for petroleum tankers put in place in as soon as possible. This should be a priority! We would like the county Governments to act on this.

QWhat are some of the salient issues affecting the

industry and how does the PA 2019 address these

issues?

A. Non-compliance with the existing regulations have been rampant leading to various offenses that have largely been perpetrated without punishment. For example, there was a complete collapse of the LPG cylinder exchange pool system. Some marketers took advantage of others illegally without facing any consequences for their actions. I expect that the transition clause in the new LN 121 will be properly enforced.

The new Act has enhanced licensing requirements and penalties geared towards eradicating malpractice and promoting a level

19


CO

VE

R S

TO

RY

CO

VE

R S

TO

RY

19

playing field for all actors in the Industry. The creation of a Regulator with enhanced powers to regulate, monitor and supervise petroleum operations in Kenya is expected to completely transform the business environment.

QWould you say the PA 2019 reassures

investors’ confidence in the Country?

A. A lot was done through wide consultation with stakeholders in improving the new Act and it has largely covered the pain points of the Industry therefore boosting investor confidence. However, full restoration of investor confidence will take time. The Regulator has to show consistency in the enforcement of rules and regulations over a period of time before investors can be reasonably assured. This will come.

QWould you say the new Act is an enabler of

wealth creation for the industry?

A. It provides for promotion of exploration, development and production, commercialization, infrastructure development and regulations which are fundamental enablers to wealth creation in the entire value chain. Development of local content and capacity building is highly encouraged by this Act and it will greatly contribute to economic progression in Kenya as well as the East African Region. Furthermore, it creates a lot of opportunities for investment cutting across the whole value chain leading to creation of wealth for the nation.

QIn your view, what’s the future outlook for the

petroleum industry?

A. The future certainly looks great. However, there is still a lot of work to be done. It will take one step at a time. The Act needs to be implemented systematically in order to harness its full benefits. All stakeholders must exercise their mandate as enablers to a thriving sustainable Oil industry.

QPIEA had a fundamental role during the PA

2019 formulation and subsequent pre-assent

due process, are there any roles for the PIEA

on this Law going forward?

A. Going forward, the collaboration between the various Government agencies and the PIEA needs to continue.

The PIEA represents a credible and legitimate voice for the Industry players. The PIEA must continue to advocate for the adoption of best practices in creation of good laws. The Associations must equally continue to collaborate with the Government in developing standards of good practices as well as providing the platforms that encourage communication and information sharing amongst all stakeholders.

PIEA should work continuously with various stake holders in championing the implementation of the Act through giving input in development of the National Petroleum Policy and creating Regulations provided by the Act.

QWhat message do you have for the energy sector players

regarding the new Act?

A. The new Petroleum Act will be transformative, and its proper implementation is central to the development of the petroleum Industry in Kenya and the East African Community. It clearly defines the roles of the different stakeholders and will eventually serve as a catalyst for investment and economic growth. I encourage the industry players to embrace the Act and fully comply with its provisions.

The on-going efforts towards development of the National petroleum policy need to be fast-tracked and a strategic plan needs to be put in place to steer transformation of the industry.

QIs the industry likely to undergo a transformation/

realignment following the Pipeline expansion, Pipeline

forensic audit outcome, new LN 121, SGR utilization,

KOT relocation etc?

A. Our operating environment will certainly change for the better and all stakeholders and actors in this sector should embrace all infrastructure developments such as pipeline expansion and KOT relocation. They should also provide significant input to achieve the desired result.

A gazette notice for the new LN 121 for LPG will soon be published after it has been realigned with the Petroleum Act. This has been long-awaited and the industry certainly looks forward to the exponential growth and investments that will accompany the implementation of the Regulation. This can only be beneficial to the masses and the overall economy.

As for the pipeline forensic audit outcome, the industry needs the assurance that its current assets (stocks) are in safe hands with KPC.

The industry expects the Energy and Petroleum Regulatory Authority (EPRA) to play a central role in managing this change. We anticipate significant reforms in the sector and

stringent enforcement of the regulations which would lead to the creation of a level playing field in the industry and the disappearance of non law-abiding entities.

20


OV

ER

ST

OR

YC

OV

ER

ST

OR

Y

Mr Sanjay Gandhi, Kurrent Technolgies’ Chief Operating Officer

Local Content; a key driver for Kenya’s economic growth

East Africa is no longer a stranger to oil and gas exploration. From the discoveries in the

Albertine Graben region of Uganda, to the South Lokichar area in Kenya, and the offshore gas fields in Tanzania, there have been several recent commercial discoveries of oil and natural gas.

These discoveries will require the design, construction, operation and eventual decommissioning of infrastructure which we have hitherto not seen in this part of the world.

In Kenya, the infrastructure will include development of well pads, pipeline gathering systems, central processing facility to separate the crude oil produced, water and gas, a make-up water system, an export pipeline with pump stations, and an export facility.

The design, construction and operation will most likely be undertaken to recognized oil industry standards by international companies who have developed and operated such infrastructure previously.

International oil companies are driven by quality, cost and strict adherence to timelines for successful delivery of projects and therefore Kenyan companies need to be prepared to conform to such standards.

Kenya is also driven by its own national development goals articulated in the Vision 2030 and therefore the Government has a responsibility to ensure that Kenyan companies get a share of the business opportunities presented by mega projects executed in the country.

This can be achieved by a well thought out legislative framework that requires international companies to provide local content opportunities to indigenous Kenyan companies.

In accordance with the Statutory Instruments Act of 2013, a Regulatory Impact Analysis (RIA) is required to be undertaken in order to develop responsible legislation.

In this regard, Kenya recently developed several laws and regulations to create a framework for implementing local content requirements by international companies.

In September 2018, the Ministry of Industry, Trade and Cooperatives developed a framework Local Content Policy that applies to all sectors of the economy.

This draft policy has been designed taking into consideration Kenya’s national development goals which are articulated in the Vision 2030 blueprint.

The Policy supports the national development agenda by nurturing local participation towards industrialization at community, county and national level.

This Policy is well thought out and structured and if implemented to the letter, will go a long way in meeting Kenya’s national development goals articulated through Vision 2030.

In February 2018, the Senate drafted the Local Content Bill 2018 for implementing the Local Content Policy.

The Local Content Bill 2018 which is yet to be enacted into law, is applicable to all commercial activities related to the exploration, extraction, development and exploitation of oil, gas and other petroleum resources in the extractive industry in Kenya.

However, this is a contrast to the Local Content Policy which states that it applies across all economic sectors.

In March 2019, the Petroleum Act was assented to by the President and came into force on March 28th 2019. This

legislation applies to the upstream, midstream and downstream petroleum subsectors.

Part VI (Clauses 50 – 52) of the Act contains the legal framework for implementing local content requirements.

The Act requires a “contractor” (defined as a person with whom the national government concludes a petroleum agreement) to develop a Local Content Plan to address and cover as applicable, (i) employment and training, research and development, technology transfer and industrial attachment and apprenticeship.

The local content plan is also expected to cover and address legal services, financial services, insurance services, succession plans for positions not held by Kenyans, consultancy services, construction services, hospitality services, transport services, security services, clearing and forwarding services and Inspection services.

Sometime in 2019, the Ministry of Petroleum and Mining drafted the Petroleum (Local Content) Regulations, 2019 which are comprehensive and provide the “what to do” framework for operationalizing the local content clauses of the Petroleum Act, 2019.

Among other things, these regulations require that a “contractor” develops a local content plan in accordance with the requirements set within the regulations.

In order to effectively and efficiently achieve success in local content, the country needs to follow a systematic and structured process which will meet the needs of Kenya’s national development agenda, provide appropriate opportunities for procurement of Kenyan manufactured goods and services (Buy Kenya, Build Kenya), enhance capacity through transferable skills and be fair to sponsors of foreign and domestic direct investment without whom projects cannot be completed.

21


CO

VE

R S

TO

RY

CO

VE

R S

TO

RY

Daniel Muasya

Resident Country Representative and Upstream Manager

Shell International Exploration and Production – Kenya

The New Petroleum Act 2019 At A Glance

21

In this regard, a Regulatory Impact Analysis (RIA) should be undertaken on local content to identify the need for legislation and its economic impact on the business community as well the cost of setting up administrative structures to sustainable enforce the legislation.

Based on the outcomes of an RIA, it would be prudent to have the Local Content Policy approved by Cabinet after going through the requisite stakeholder engagement at the community, county and national levels and create a “framework” Local Content Act which is applicable to all sectors of the economy as envisaged by the Local Content Policy.

It will also be important to have existing, proposed or emerging sectoral legislation to derive its local content requirements from the framework Local Content Act, and develop subsidiary local content legislation based on the sectoral principal statute.

Currently, Kenya has a “draft” Local Content Policy, a “draft” Local Content Bill, the Petroleum Act 2019 which

is in force, and “draft” Local Content Regulations under the Petroleum Act 2019.

It is therefore imperative to get the “draft” Local Content Policy approved by the Cabinet and sent to Parliament who should then update the “draft” Local Content Bill, 2018.

Once this is done, a validation exercise should be performed to confirm whether the local content clauses in the Petroleum Act 2019 are aligned with the framework Local Content Act.

Subsequently, any sectoral subsidiary legislation that is drafted should be fully derived from the principal statute to which it applies.

Local content legislation must be applicable to all sectors of the economy as envisaged in the draft Local Content Policy.

It appears that the thrust of the existing legislative framework mainly applies to the upstream and midstream oil and gas sector and the legislation does

not appear to target local content in other sectors of the economy such as highways and roads, power generation and transmission, and mining all of which employ significant numbers of foreign based consultants and contractors.

There are several reasonably foreseeable mega projects such as Project Oil Kenya (development of the upstream and midstream facilities for crude oil), the Nairobi – Mombasa expressway, and the Lamu coal power plant that will employ over several thousand people.

It is therefore crucial that as Kenyans, we should be prepared to exploit the local content opportunities that will arise from such projects.

We therefore need to plan from now and prepare ourselves technically, economically and financially to participate in the socio-economic development of our people.

Without this, we will resign our national development goals to others and to our own detriment.

On March 12 2019 President Uhuru Kenyatta assented to the Petroleum Bill ushering in a new regime to govern the petroleum industry for the foreseeable future.

The President’s action repealed the already existing Act of 1986, marking a major milestone in the petroleum industry given that bill had delayed in parliamentary since its initial drafting in 2015.

Three National Entities;

Amongst key provisions in the new Act is the establishment of three national entities to manage and regulate Kenya’s energy resources.

These are the Energy and Petroleum Regulatory Authority (EPRA), the Rural Electrification and Renewable Energy Corporation (REREC) and the Nuclear Power and Energy Agency (NPEA).

Under the new Act, EPRA, formerly Energy Regulatory Commission (ERC), is mandated to regulate generation, importation, exportation, transmission, distribution, supply and usage of electrical energy except for licensing of nuclear facilities.

It will also be required to regulate the importation, refining, exportation, transportation, storage and sale of petroleum and petroleum products except for crude oil.

The Authority will also be required to manage production, conversion, distribution, supply, marketing and usage of renewable energy.

The REREC shall be responsible for, among other things, overseeing the implementation of the Rural Electrification Programme, managing the Rural Electrification Programme Fund and sourcing for additional funds for the Rural Electrification Programme and renewable energy.

Continued to page 22

22


OV

ER

ST

OR

Y

NPEA will under the new law be required to propose policies and legislation necessary for the successful implementation of a nuclear power programme. The agency would undertake extensive public education and awareness on Kenya’s nuclear power programme.

The Upstream Regulatory Authority (UPRA was included in the initial draft of the Bill but later removed due to perceived duplication of roles with Energy and Petroleum Regulatory Authority (then ERC).

However, several discussions have been held to try and clarify and define its roles and it is expected to be re-introduced to the Act through a parliamentary amendment.

Revenue Sharing;

The new law provides a formula on how the revenue and profits obtained from upstream petroleum operations shall be apportioned between the national government, county government and the local community.

The national government shall keep 75 per cent of the revenues, the county government (20 per cent) of the national government’s share and the local community shall receive five (5) per cent of the national government’s share to be managed by a board of trustees.

This comes after protracted discussions that almost derailed the Early Oil Pilot Scheme launched by the President in June 2018.

At the Centre of the discussions was how much of the oil revenues would benefit the local community and the County government.

Model Product Sharing Contract;

Included in the new Petroleum Act Is the Model Product Sharing Contract (PSC) which does not seem to be significantly different from the repealed PSC that had already been signed with the International oil companies.

The key development in the new law is that Parliament shall now be involved in review and ratification of future production sharing contracts and field development plans which is in conformity with Article 71 of the Constitution.

In this publication we will review two key areas of the new PSC.

Term, Exploration, obligations and termination;

Exploration phase of Petroleum operations is split into three Exploration periods in both PSC’s. These are Initial Exploration Period (IEP), First Additional Exploration Period (FAEP) and Second Addition Exploration Period (SAEP). Time periods are not defined but most periods run for a period of 2 years with the Cabinet Secretary empowered to grant an extension if the contractor requests for extension especially to complete tests on an exploration well.

If a commercial discovery is made, Development period shall be 25 years and if the contractor has fulfilled all his obligations for the specified term of the contract, he may request an extension of the development area for a period not exceeding ten 10 years to the Cabinet Secretary for consideration.

The new PSC gives the minister powers to grant or deny the minimum 10-year extension unlike in the previous PSC which stipulated that development phase can be 25 to 35 years.

Each phase has minimum work obligations defined in the PSC which include minimum expenditure in US dollars, minimum Geological and Geophysical work obligations and the minimum number of exploratory wells to be drilled with the minimum depth defined.

Before work commences the contractor is required to provide a security to the Cabinet Secretary guaranteeing the minimum work obligation in a form of bank and or parent company guarantee.

In both PSC’s the contractor is obligated to surrender at least 25 per cent of the remaining area in IEP and FAEP and all that area that is not development area at end of SAEP.

In all phases, surrender does not reduce minimum work obligations and expenditure for the Exploration Period or any accrued obligations for prior periods.In both PSC’S the Contractor is required to pay signature bonus upon signing of the contract and surface fees at each exploration phase calculated based on the size of the acreage.

Local Content;

The new PSC has more defined and stringent local content requirements compared to the repealed PSC. The contractor and his sub-contractors are required to employ Kenyan Citizens and conduct training courses and programs that will progressively increase employment in Kenya.

The training courses and programmes which should also take into account marginalized groups are to be established and conducted in consultation with the Cabinet Secretary.

The new PSC also establishes a training fund where the contractor shall be required to make an annual contribution. The fund will be used to finance capacity building initiatives in order to enhance local Oil and Gas skills in the industry.

The law also requires the contractor and his sub-contractors to give equal treatment to local enterprises by ensuring access to all tender invitations and by including high weighting of local value added in the tender evaluation criteria.

In addition, the contractor is required to give reference to Kenyan materials and supplies, and Kenya sub-contractors for services where practicable.

To ensure compliance, the new PSC requires the contractor to provide the cabinet secretary and the Authority responsible a copy of each contract and a brief description of efforts made to find a Kenyan supplier or sub-contractor.

The PSC also requires the Contractor and his Sub-contractors to establish a Technology Transfer Programme aimed at building and developing in Kenya specialized technical, management and professional skills relevant to the industry.

In addition, the contractor is expected to develop indigenous Kenyans to take decision making roles in the organization.

These requirements will ensure that Kenya is able to run its own Oil and Gas industry with minimal support from foreign companies soon, an approach that has been implemented with great success in the Middle East Countries.

In our next publication we will review the remaining aspects of the new PSC which include Rights and Obligations of the contractor and the government, Work programme development and production, Product sharing, taxation and Accounting requirements.

Continued from page 21

22


23


Mr Martin Mbogo, Tullow Oil Kenya Managing Director and

Founder Chairman of Kenya Oil & Gas Association (KOGA)

Upstream sector feels discriminated by the new Petroleum laws

While various sectors have approved the Petroleum Act (PA) 2019, the upstream sector is of the view that the new laws are cumbersome and punitive.

Tullow Oil Kenya Managing Director and Founder Chairman of Kenya Oil & Gas Association (KOGA) Martin Mbogo says the Act requires a contractor to obtain over 30 permits, which are in addition to other permits, consents, and approvals required under other statutes such as EMCA, OSHA, County Government, the Energy Act, Land, Water, etc. in order to carry out their operations.

According to Mr. Mbogo the increased permitting is likely to impact on the Project Delivery timelines, cost, and predictability of execution.

He argues that fines and custodial sentences introduced while well- intended, they are punitive as compared to similar industries and jurisdictions.

“This is seen as discriminative to the sector and will likely impact on attracting talent into the industry. It is also the industry view that the sanctity of the current PSCs has been preserved and that the rights and privileges that the existing PSC holders negotiated at the time of entry into Kenya and before the enactment of the Act, will remain unaffected,” he says.

“Failure by the Ministry to clarify expeditiously, how the Act will be implemented as well as the publication of the draft subsidiary legislation will likely affect the way of doing business in the sector in the next few years.”

Section 9 of the Act obligates the National Government to create a conducive environment for investment in petroleum operations and infrastructure development but the Act is silent on how this will be done.

It is hoped that the strategic plans that the Cabinet Secretary is required to develop under the Act, will articulate this.

“Given that the upstream sector is still nascent in Kenya, investors are keen to see efforts made to initiate fiscal policy incentives that will attract players into the sector. As the Act seeks to assure existing PSC holders that the rights and privileges negotiated at the time of entry into Kenya and prior to the enactment of the Act will remain un-affected, investors will be cautious to see how this will be implemented in actual practice over the coming years,” says Mbogo

KOGA expects Energy and Petroleum Regulatory Authority (EPRA) to expeditiously clarify how the Act will be implemented and how its role will interface with the Ministry, clarity on how applications for various permits will be done, timelines within which such permits will be issued and provide clarity on how the cost implication associated with such permitting processes will be treated.

“KOGA will be keen to see how EPRA will protect investor interests especially at such a time as this when there seems to be some clawing back on the fiscal incentives that were available to investors previously” says Mbogo

Mbogo further argues that the Petroleum Act is not prescriptive in local content minimum requirements and simply assigns the formulation of these requirements to EPRA and more is expected in the regulations.

“The Act fails to address the distinction between local content from a national perspective and local content from a county

p e r s p e c t i v e and how such requirements will be aligned to the country’s policy on national cohesion

and integration” he explains

While transitioning to the new laws, expected changes in the upstream industry include creation of new institutions such as the National Upstream Petroleum Advisory Committee, Energy Petroleum Regulatory Authority and Energy and Petroleum Tribunal.

Others are increased reporting by the Upstream players, increased permitting requirements, increased public participation and involvement in upstream activities and more regulation and legislations.

“My message to the energy sector is there are lessons to be learned from how long the Petroleum Act has taken to be legislated, how Industry concerns were addressed or failed to be addressed etc. and continuous engagement is crucial to the implementation of the Act. There will be continued legislation for the energy sector and there is need to continue to work closely with the Ministry in ensuring that there are not conflicting laws or policies issued that may impact negatively on the sector,” says Mbogo.

“Is the Petroleum Act an enabler of wealth creation for the industry? the answer will lie in the implementation. The next 3 to 5 years will, therefore, be observed keenly.”

CO

VE

R S

TO

RY

23

This is seen as discriminative to the sector and will likely impact on attracting talent into the industry

24


OV

ER

ST

OR

YC

OV

ER

ST

OR

Y

Mr Brian Muriuki, National Residence Advisor to the P.S Petroleum, Ministry of Petroleum and Mining

New Petroleum laws an incentive for investors

The Petroleum Act 2019 provides greater transparency to investors and also provides clarity on fiscal

requirements which are imperative for new investors as stability of fiscal and regulatory environments are key issues investors consider.

According to Brian Muriuki, Petroleum Strategy Advisor in the Ministry of Petroleum and Mining, inclusion of uplift and r-factor in the model PSC provides fiscal incentives for investment.

Additionally, inclusion by providing representation of county governments in Regulator Board and Advisory Committee increases the level of stakeholder engagement to mitigate the non-technical risks of the asset.

“The petroleum sector was for a long time governed by a Petroleum Law enacted in 1986, Petroleum Production and Exploration Act of 1985. The country needed to modernize the petroleum law and the PSC; incorporating the entire value chain, aligning it to the Constitution of Kenya 2010, address gaps that were there in the now repealed law and at the same time boost investor confidence” says Mr. Muriuki.

He adds that the new law introduces some key aspects that will aid in optimal management of oil & gas resources.

These include establishment of a regulatory authority to oversee monitoring of license holders and compliance to the law, enhancing competitiveness in licensing of blocks by introducing a bid round process.

The Ministry of Petroleum and Mining has already commenced preparation for the bid rounds. The law provides for constitution of a framework for reporting, transparency and accountability.

The Ministry is also in the process of finalizing the roadmap for the Transparency & Accountability framework and the law provides for establishment of a local content framework.

The Ministry of Petroleum & Mining together with Ministry of Industrialization Trade & Co-operatives have finalized drafting of a local content policy and local content regulations.

Muriuki further adds that the Ministry of Petroleum and Mining has laid mechanisms to build the requisite capacity among the institutions that will support the implementation of the new law.

“Various capacity building programs have been arranged in areas of Health Safety and Environment (HSE), Economics, Tax, Commercial Negotiations, Cost Audit, Geology & Geophysics (G&G), Engineering and other areas,” he says

He strongly feels that the new Act is an enabler of wealth creation through local Content provisions that have a magnifying effect in job creation that allow more local involvement in both direct and indirect employment opportunities in the O&G sector; and sharing of Petroleum Resource; 20 per cent to county government and five (5) per cent to local community of Government share of profit will ensure revenues trickle down to the local mwananchi.

“His Excellency the President of Kenya has placed significant importance on

Oil & Gas development as part of the enablers for the Big 4 agenda for this country. We in this industry have the task of harnessing and developing petroleum resources to help spur Kenya’s future growth. Petroleum resources have the potential of becoming one of the country’s significant foreign exchange earners and an engine that drives our infrastructure growth,” says Muriuki.

“I am overall positive about the future of our industry, but we have to ensure that we create a suitable environment that will encourage greater investment and new credible players into our frontier exploration region. I always say, the only way to find hydrocarbons is at the end of a drill bit. Speed of decision making, adequate fiscal incentives, and a sound legislative framework are some of the levers that will encourage exploration and grow Kenya’s hydrocarbon resource base.”

According to Muriuki industry players are working to ensure they are in compliance, some even prior to enactment of the new law.

“We expect an even greater emphasis on key areas now ratified in law; Local Content, HSE standards, compliance, accounting procedures among others. I think it falls upon all the players in the energy sector to embrace the new Act and work together within this legislative framework to ensure that we maximize the potential for oil and gas that exists in Kenya,” he says

Speed of decision making, adequate fiscal incentives, and a sound legislative framework are some of the

levers that will encourage exploration and grow Kenya’s hydrocarbon resource base

25


CO

VE

R S

TO

RY

25

New Act compliments NEMA regulations

NEMA Director General Prof Geoffrey Wahungu

National Environmental Management Authority (NEMA) has applauded the Petroleum Act 2019 for its elaborate provisions on

environmental management in the oil and gas sector that complement the authority’s existing regulations.

The Act has devoted a section on Environment, Health and Safety which include requirements by the Contractor to undertake Strategic Environmental Assessment (SEA) and Environmental Impact Assessment (EIA), restoration of well sites, compliance with the relevant environmental licenses, waste management, and clean-up of polluted or damaged environment among others.

NEMA Director General Prof. Geoffrey Wahungu says these measures complement similar provision in environmental regulations under EMCA CAP 387 which may be generally applicable to all sectors but also to some specifics such as the SEA, EIA and Licenses. “Since Energy Act provides for the establishment of Energy and Petroleum Regulatory Authority (EPRA) through the Energy Act 2019 and PA 2019, EPRA becomes a Lead Agency that NEMA will collaborate with to ensure effective coordination and supervision of all environmental and social issues in the oil and gas sector” say Mr. Wahungu.

NEMA, through the Environment Management and Coordination Act CAP 387 and regulations of the Act, ensures sustainable management of the impact of oil and gas industry to human health and environment.

The Act and the regulations provide environmental compliance tools and instruments for this purpose.NEMA’s other role is to ensure that the oil and gas industry complies with the environmental laws and policies.

According to Prof. Wahungu the Petroleum Act provides for the establishment of institutions and instruments that regulate activities in oil and gas supply chain and specifically the upstream sector.

“Since the Upstream Sector is new in Kenya due to recent oil discovery in Turkana County, the PA 2019 will provide the necessary regulatory mechanisms for the sector which had not been addressed comprehensively in the other previous petroleum laws,” he says.

“The Act also recognizes the role of NEMA and provides for synergies between the authority and institutions it establishes including other entities regulated by the petroleum law. NEMA will continue to play the overall supervisor and coordinative role relating to all environmental matters as mandated in EMCA CAP 387. In addition, PA 2019 establishes the National Upstream Petroleum Advisory Committee where NEMA is represented by the Director General to provide advisory role on upstream petroleum operations.”

According to Wahungu the authority will not align its current regulations with those provided by the Petroleum Act since regulations provided under EMCA CAP 387 implements the provisions of the Environmental Law which address matters that relate to the supervision and management of all matters relating to the environment.

“The PA 2019 applies to a specific sector, oil and gas and where there is conflict between the provisions of Petroleum Act 2019 and EMCA CAP 387 in relation to environmental matters, the latter will supersede. EMCA CAP 387 will also address gaps and provide detailed provisions that are mentioned in PA 2019 such as waste management, venting and flaring, EIA, SEA, licensing conditions etc. Other relevant laws may apply such as the Climate change Act, Water Act, Forest Act etc.” he says.

He further adds that the Petroleum Act 2019 does not change the authority’s regulatory mandate to the petroleum industry in any way.

“NEMA has not previously and does not exercise or has a mandate in the Petroleum Sector operations. However, it provides tools for the management of the environment in the petroleum sector through EMCA CAP 387 and its regulations which are not limited to EIA, Effluent, Solid waste and other licensing regimes but also enforcement in cases of non-compliance,” explains Wahungu.

He says moving forward, NEMA will collaborate with EPRA in ensuring the environmental challenges presented by this sector and more specifically upstream activities are properly managed through various platforms such as the National Upstream Petroleum Advisory Committee where he is a member in order to have a sustainable management of the oil and gas industry in Kenya.

The Act also recognizes the role of NEMA and provides for synergies

between the authority and institutions it establishes including

other entities regulated by the petroleum law. NEMA will continue

to play the overall supervisor and coordinative role relating

to all environmental matters as mandated in EMCA CAP 387

26


QWhat powers and mandate

does NOCK have in

implementing the Petroleum

Act 2019 and especially in the

Upstream segment?

AThe Petroleum Act 2019, defines the commercial role of the National Oil Company particularly

within the Upstream segment. Section 8 (3) mandates the corporation to carry out upstream petroleum operations on behalf of the National Government. This Section read together with Section 15(2) which provides that the Government may reserve certain blocks for itself indicates that the Corporation will play an even bigger role in the oil and gas sector into Kenya’s future.

Section 41 (1) of the Act further provides that in the case of a commercial discovery, the Government may elect to participate in any development area and acquire a participating interest (equity participation) through National Oil.

On the other hand, Section 12 of the Act acknowledges the advisory role of National Oil and provides that the CEO or an authorized representative of National Oil will serve as a member in the National Upstream Petroleum Advisory Committee (NUPAC) which is the main body charged with advising the Cabinet Secretary on Upstream Oil and Gas matters.

In defining this mandate of National Oil, the drafters of this Act were guided by the role other successful National Oil Companies globally in jurisdictions such as Norway, Malaysia, China, India among others.

NOCK’s Upstream Mandate a

Q What will the new changes

mean to NOCK’s structure?

A The new Act in Section 38 introduces segmentation of the petroleum sector by

providing that a Contractor engaged in Upstream petroleum operations shall not have proprietary rights or control of Downstream operations save for

through distinct subsidiaries.

This effectively means that for National Oil to fully discharge its Upstream and Downstream mandates, it will need to alter its existing corporate structure in compliance with this provision. In this regard, the Corporation will be undertaking a corporate restructuring exercise to reorganize itself along the subsidiary model (under a holding group) subject to approvals by its shareholders being Ministry of Petroleum and Mining and The National Treasury.

I am happy to report that even prior to this provision in the Act, the National Oil Board and Management had envisaged that in order to effectively discharge its mandate, the Corporation needed to be reorganized into a more efficient set up in line with best practice in other progressive National Oil Companies. In this regard, the Corporation has already embarked on its 15- year transformation agenda, a key outcome of which is the corporate reorganization.

Separately, Section 10(d) Petroleum Act moves the National Hydrocarbon Data Centre presently held by National Oil to the sector regulator the Energy Petroleum Regulatory Authority (EPRA). Effectively this function will therefore move from National Oil.

Q What Upstream projects is

NOCK currently undertaking?

A The Corporation has been conducting its own oil and gas exploration activities in Block

14T where it is the licensee. This Block

lies in the Tertiary Rift Basin south of Blocks 10BB and 13T where commercial discoveries of oil have already been made. This is a large block covering over 7,000 square kilometers stretching from Mogotio in Nakuru County to the Tanzania border.

Currently, however, exploration activities are focused on the southernmost part of the Block within the Magadi Sub-basin. To date the Corporation has undertaken extensive studies involving surface geographical studies, aeromagnetic, geochemical and gravity studies, acquisition of seismic data and drilling of two stratigraphic wells.

We are now moving to identify a strategic partner through a farm down process with a view to engaging a competent strategic partner with adequate capacity to enable us move to the drilling stage with a target to drill a well in 2020/21. The partnership will also be an avenue to transfer knowledge, expertise and technological capacity to National Oil in developing oil and gas resources.

We are also focusing on setting up various Upstream support business units. We recently completed a seismic processing centre and are now working on setting up a drilling services business as well as a geochemical and petrophysical laboratory.

The objective of these business units is not only to diversify revenue streams for National Oil but more importantly to position Kenya as an oil and gas hub to support the emerging upstream developments in East Africa.

QWhat transitional changes

are expected in the coming

months? What will these

changes require?

A The commercial role which the National Oil plays in Upstream and Downstream Oil and Gas

sub-sectors has been reaffirmed in the Petroleum Act. In this regard the Corporation has embarked on

The state-owned National Oil Corporation of Kenya (NOCK) has been given a mandate under the Petroleum Act 2019 to carry out upstream operations on behalf of the government alongside its downstream

operations that it currently undertakes.

The Petroleum Institute of East Africa (PIEA) sought to find out what this new role means to the oil marketer.

National Oil Corporation of Kenya CEO

Ms MaryJane Mwangi

CO

VE

R S

TO

RY

27


Game Changer in the Energy Sectorthe process of defining its 15-year Transformation agenda that seeks to position the company at the heart of Kenya’s economic and social transformation.

This is consistent with the role other leading National Oil Companies in countries such as Malaysia, India, China, Norway, Brazil among others have played not only in the evolution of the Oil and Gas industry but in the overall economic transformation of these countries.

In this regard we can expect in the coming months to see realignment in the Corporation’s strategy and focus as it moves to implement the new Transformation agenda in fulfillment of its commercial role as outlined in the new Petroleum Act.

The other entity that will undergo significant changes another this new law is the Energy Regulatory Commission (ERC) which is now being to the Energy and Petroleum Regulatory Authority (EPRA). The Authority is now tasked with oversight over the entire Petroleum Sector (Upstream, Midstream and Downstream) and the Energy sector.

The new Law also provides for bid rounds as a way of promoting competitive processing in awarding petroleum rights and enhancing transparency. This is another industry best practice that is expected to help the country draw even better value from Upstream licensees moving forward.

In line with the Constitution requirements of enhancing transparency in the management of natural resources, Section 31(1) of the new law provides that an approved Field Development Plan together with the Production Sharing Agreement shall be submitted to Parliament for ratification.

To operationalize these changes, there is need to have in place progressive regulations that provide detailed guidelines on how to implement provisions of the new Law. I am aware that the Ministry of Petroleum and Mining with the assistance of the World Bank through its funded project known as the

Kenya Petroleum Technical Assistance Project (KEPTAP) is together with relevant industry stakeholders are in the process of developing these regulations.

Q What message do you have

for the Petroleum sector

players/customers in regards

to the new Act?

A The Act provides a solid legislative framework and an opportunity to strengthen the oil and gas sector

in Kenya. It also addresses important building blocks for a robust Upstream sector in Kenya including local content, capacity development and environmental sustainability while also providing structures for accelerating the maturity of the Mid and Downstream segments.

I am further pleased to note that this new Act legislates the establishment of Strategic Petroleum Reserves through the creation of a Petroleum Fund to cater for Strategic Petroleum Reserves. Section 96 provides that the Cabinet Secretary may undertake in whole or in part, the provision of financing, procurement, storage, maintenance and management of petroleum strategic stocks.

Section 107(1) provides that the Cabinet Secretary shall establish the Consolidated Petroleum Fund to cater for establishment of Strategic Petroleum Reserves. The new law is a good first step in helping Kenya to sustainably commercialize her oil and gas resources even as the Government works towards first oil by 2022. The new law addresses vital areas such as revenue sharing, regulation of Upstream Operations, and local content provisions which were not very well articulated in the now repealed law.

As a player in Upstream Operations, it is essential for investors to be assured that there is clarity in the revenue sharing mechanisms. The new Act also clearly articulates oil and gas revenue sharing in Section 58 which provides that the National Government share of profits will be apportioned between itself, the County and Local Community at a ratio

of 75 percent, 20 per cent and 5 per cent respectively. These percentages are to be reviewed every ten years. The new fiscal regime in the Act, being the R-Factor Method shifts focus from calculating revenues due based on volumes alone to focus on all economic variables of the project being a fair approach for all stakeholders expected to attract more investment in the sector.

It is also instructive to note that this Act has also put more provisions on Environmental Health and Safety (EHS) with emphasis on operational safety, environmental compliance, waste management, and property maintenance, conditions for venting and flaring, safety precautions, emergency preparedness and liability of contractors for damage arising out of pollution.

The Act also provides for a transparency and accountability framework to be developed which is a best industry practice critical for the sustainable development of Kenya’s oil and gas resources.

It is also instructive to note that given the complex nature of the Upstream Oil and Gas sector and also the expansiveness of the sector, most jurisdictions globally including Norway which is sited as a best practice in management of the Oil and Gas sector, and Ghana which is a benchmark for Africa have established separate/dedicated regulatory bodies for the Upstream sector.

Overall, though not perfect, (which law is anyway) the new Petroleum Act is a positive development that will help attract investment in the Upstream sector.

This new law will also be key in helping to propel National Oil’s strategic agenda in our journey towards becoming a leading integrated Oil and Gas Company within the region and building extensive global networks. National Oil is incrementally working on developing its capacity and requisite capabilities to effectively play its role as the commercial arm of Government in delivering on the Oil and Gas agenda for Kenya as envisaged in this Act.

CO

VE

R S

TO

RY

28


DU

ST

RY

2

1

3

5

6

7

4

1. Andrew Kamau, Principal Secretary, State Department of

Petroleum, Renato D‘souza, Head of Oil and Gas Stanbic

Bank Kenya, Dr (ENG) Karanja Kibicho Principal Secretary

Interior and Olagoke Aluko PIEA Chairman display the 1st

Quarter Petroleum Insight Magazine after its unveiling in

Nairobi.

2. Nairobi Depots Safety and Security Committee de-brief

after the industry emergency response preparedness drill.

3. PIEA Directors peruse the 1st Quarter Petroleum Insight

magazine.

4. Nairobi depots safety and secuity committee risk

assessment inception meeting at KPC.

29


IND

US

TR

Y /

TR

AIN

ING

98

10

12

11

13

5. Petroleum Institute of East Africa (PIEA) and Anti-

Counterfeit Agency officials meeting at Anti Counterfeit

Agency boardroom in Nairobi.

6. Kenya Supply Chain review meeting with PIEA and

Haskoning DHV Nederland B.V.

7. Cabinet Secretary Ministry of Petroleum and Mining John

Munyes, His Ugandan counterpart Hon. Irene Muloni,

Minister of Energy and Minerals Development of Uganda

together with other government officials at the exhibition

during the 9th East Africa Petroleum Conference and

Exhibition.

8. National Oil CEO Ms. MaryJane Mwangi planting a tree

at Njuki-ini Forest in Kirinyaga County. The Corporation

together with the local community planted 10,000

indigenous trees in 10 Ha space of the forest.

9. From Left: David Ayilo, Total Kenya Corporate Programs

Manager hands over a sponsorship cheque to Christian

Lambrechts, the Executive Director Rhino Ark Charitable

Trust Fund Kenya, and the Rhino Charge Chairman Mr.

Don White, for the 2019 Rhino Charge.

10. All female panelist, L-R: Bassem, Mwende, Elizabeth and

Charity, moderated by WLPGA David Tyler at PIEA East

Africa LPG Summit.

11. Participants during the E.A LPG training.

12. PIEA Directors and Kenya Revenue Authority officials

in a group photo after a meeting held at KRA offices in

Nairobi.

13. PIEA training for Total PLC stocks team.

30

2nd Quarter, April - June 2019M

EM

BE

R P

RO

FIL

E

Global energy and infrastructure firm Asharami Synergy has entered into the Kenyan market with hopes of being the provider of choice for energy products in the highly

competitive sector.

The firm, the downstream arm of the Sahara group has interest in importation, trade, storage and distribution of refined petroleum products.

Asharami Synergy emerged from the consolidation of the Sahara groups’ downstream operations.

The individual downstream companies were consolidated into one entity to create an efficient fuel solutions provider to serve the African market in line with group strategy of being “the provider of choice wherever energy is consumed.”

Between 2000 - 2017, the company expanded business operations into Ghana, Angola, Uganda, Cote D’ivoire,

Global energy firm Asharami Synergy takes Kenyan energy market by

storm

Cameroon, Tanzania, Congo, Mozambique, South Africa, Gabon, Zambia, Guinea, Burundi and Kenya.

“This consolidation brought about the merger of Nine (9) Sahara group companies with over 20 years of operating experience in the mid and downstream sector. Operations commenced in 1996 with the importation of refined petroleum products for sale in Nigeria,” said Mr. Debola Adesanya, the firm’s Country Director.

“In the intervening years, other companies were established to facilitate product storage, aviation fuel marketing as well as product distribution and retailing. These companies operated separately as independent companies, exploring various business opportunities within the sector until 2016 when the decision to consolidate was made,” he added.

In the last two years since it started operations as a consolidated entity, Asharami Synergy’s has delivered seven OTS cargos within a year of operation in Kenya, supplied to

major development contracts in Uganda, Congo and Somalia and maintained its leading position as the number one aviation fuel marketers in Nigeria with an average of 23 per cent market share over the past two years.

The firm also achieved improved operational efficiency, fueling 1,003,830 million litres sale of Aviation Turbine Kerosene (ATK) into plane at the Murtala Mohammed International Airport, Lagos in a single day without any flight disruptions and launched its lubricant brand Asha Lubes into the market in Nigeria with plans to replicate same across Africa.

“We are poised for even more achievements in the coming years with major infrastructural development projects in the works,” said Adesanya,

The firm has faced its share of challenges notably economic upheavals between 2015 and 2017 as a result of the fluctuating

Debola Adesanya, Asharami Synergy‘s Country Manager

31


ME

MB

ER

PR

OF

ILE

31

trends in global oil prices and consequent modifications to the fiscal and monetary policies in the country.

This put the Nigerian economy in a recession that negatively impacted businesses nationwide and most especially in the oil and gas sector.

“To bring it home to Kenya, Asharami Synergy has faced challenges any new entrants in the industry would encounter. Gaining the trust and confidence of the industry at large which we are still facing in other aspect of the business has been a major constraint,” said Adesanya.

“To counter these challenges, our focus has been on streamlining our processes, improving on our efficiency, gaining the trust of the relevant stakeholder through excellent service delivery and topmost, establishing ourselves as a company of great integrity. This has been the major driver of our success” says the country manager.”

Asharami Synergy’s business offerings cover the supply of refined petroleum products including; Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Aviation Turbine Kerosene (ATK also known as Jet A1), Liquefied Petroleum Gas (LPG), and Lubricants.

“We import and supply these products to various classes of consumers; the bulk customers who are majorly other oil marketers as well as International Oil Companies (IOC) with large fuel needs. In addition, we engage in the distribution of these products to our Commercial and Industrial customers, corporate businesses and private individuals who utilize these fuels to power their homes offices, and factories. We also source and store refined petroleum products on behalf of our clients” explained Adesanya.

“Furthermore, our supply chain enables us to provide for the retail of petroleum products via our strategically located retail stations located across our areas of operation.”

He added that Asharami Synergy’s Vision is to be the leading fuel solutions provider in Africa.

“Our strategy towards achieving this goal is to focus on internal operational efficiency towards the attainment of impeccable service delivery. We are highly motivated to ensure that we deliver the best customer experience across all our business segments” he said.

In order to distinguish its self from its competitors, Asharami Synergy focus is satisfying its customers’ fuel needs.

“To ensure that we do this to the best possible standards, we are constantly improving our service delivery, efficiency and leveraging on technology to meet the demands of the consumers. We believe that there is always a better approach to fulfilling a task and delivering services. To this end, we have a dedicated Business Innovation team whose job is to explore viable options for improving our fuel solutions delivery” said Adesanya.

“In an industry such as ours, whose products are homogenous in nature, we focus on brand differentiation through efficient service delivery to all our customers. We pride ourselves on our integrity and reliability.”

Asharami Synergy engages in various Corporate Social Responsibilities initiatives focused on building capacity through formal education and skills acquisition trainings in the communities where it operates.

“Our goal is to positively impact literacy levels by supporting schools with important learning resources and equipping a number of skills acquisition centers to enable learning. Asharami Synergy is obliged to contribute to these key development areas as part of our commitment to the attainment of the UN Sustainable Development Goals” he explained.

According to Adesanya the Energy sector’s future is bright as the country gears towards an eco-friendly and greener environment.

“Over the years, we have witnessed the ban of plastic bags, charcoal and reduction in the use of Kerosene in Kenya. This has greatly increased the reliance on gas in the country. It is safe to say that countries in East Africa are beginning to key into the idea of an eco-friendly and greener environment. The result of this will be the increase in the consumption of gas as a replacement for charcoal and kerosene” he said.

“We foresee that other East African countries will follow in the footsteps of Kenya in the near future by embracing the use of gas. Kenya is still the leader and continues to lead the way for others to follow especially in terms of infrastructure development.”

According to Adesanya Asharami Synergy’s goal is to be the leading fuel solutions provider in Africa.

The firm is currently working on various infrastructural projects to improve the supply and distribution of refined products along the downstream value chain by improving product sourcing and network for the distribution and supply of products across African.

“Currently the infrastructure for product supply and distribution in Africa is inadequate to meet the needs of the consumers. According to OPEC estimates, the demand for petroleum products is expected to grow by three per cent annually over the next five years,” said Adesanya.

“With the expected growth in demand in the coming years, this infrastructural deficit is expected to widen significantly. Asharami Synergy is working towards bridging this infrastructural gap in the industry to ease the flow of products and increase access to hard-to-reach areas at a reduced cost to the end users.”

Over the years, we have witnessed the ban of plastic bags, charcoal and

reduction in the use of Kerosene in Kenya. This has greatly increased the reliance on

gas in the country. It is safe to say that countries in East Africa are beginning to key into the idea of an eco-friendly and greener environment. The result of this will be the increase in the consumption

of gas as a replacement for charcoal and kerosene

32


In line with Article 201 of the Constitution of Kenya (2010)which requires openness, accountability and

public participation in financial matters, the National Treasury in November 2018 invited institutions from the private sector, non-governmental organizations and individuals to make policy submissions for consideration during the national budget for the 2019/2020 fiscal year. The Cabinet Secretary (CS) in charge of the National Treasury Mr. Henry Rotich presented this year’s national Budget in June13 2019.

Budget proposals are not just about statistics or charts; they have real impact on the economy and in turn on the citizens. What should we expect?

In February 2019 the National Treasury released the 2019 Budget Policy Statement (BPS) under the theme, ‘creating jobs, transforming lives and harnessing the ‘Big Four’.

The BPS contains among other things an assessment of the current state of the economy including macroeconomic forecasts and the financial outlook with respect to Government revenue, expenditures and borrowing for the next financial year and over the medium term.

According to the policy statement the economy grew by six percent in 2018 up from 4.9 percent in 2017 largely due to improved rains, better business sentiments and easing of political uncertainty.

The National Budget: What we expected?

The growth is projected to improve further to 6.2 percent in 2019 supported by a strong rebound in agricultural output, steadily recovering industrial activity, and robust performance in the services sector.

Whereas the government is bullish on the economy growing by 6.2 per cent in 2019, this growth could be hampered by the delayed start to the long rain season.

In addition, the ensuing food shortages across several counties in the northern part of the country could impose unanticipated fiscal pressure constraining development spending.

This said, Government continues to implement policies and programmes under the ‘big four’ agenda, which are expected to accelerate and sustain inclusive growth, create opportunities for productive jobs, reduce poverty and income inequality and provide a better future for all Kenyans.

The Government has identified the Energy and Infrastructure sector as key enablers of sustained economic growth and poverty reduction and hence we expect more budgetary allocation to this sector.

This sector receives the second largest share of resources (about 22 per cent of total expenditure) after the education sector.

It is expected that part of this budgetary allocation is to be channelled towards the construction of crude oil pipeline.

The CS in charge of Mining and Petroleum said the government is putting up an 820km 20-inch diameter, South Lokichar – Lamu Crude Oil pipeline that will connect Turkana to Lamu Port.

The pipeline is expected to reduce the amount of time spent on transportation of crude oil via trucks and is expected to be ready by 2022.

Continued delays in getting the project underway could erode the value of the entire project as the world continues to make progress in the adoption of cleaner and renewable energy shunning the use of fossil fuels.

Another key focus area for the Government is agriculture,which remains a key driver of growth in Kenya and a major contributor to poverty reduction. Majority of the agricultural activities in Kenya are rain-fed and similar to the past few years the country continues to experience erratic weather pattern, a likely result of climate change.

Accordingly, the Government needs to invest in viable irrigation and water management infrastructure to build resilience in the sector and leverage disruptive technologies to deliver agricultural services, including agro-weather and market information services.

In addition, implementation of the national warehousing receipt system and commodities exchange policy program should be fast tracked while scaling up agro-processing and value addition to increase returns on agricultural produce. There is also a need to reform the current fertilizer subsidy program to ensure that it is efficient, transparent and well targeted.

The provision of health services is a shared function between the National Government and County Governments.

These services contribute to the overall productivity and economic development of the country and therefore the Government needs to prioritize provision of the universal health coverage to all Kenyans.

Particularly, emphasis should be placed on the reduction of the financial burden to the households when it comes to procuring health services.

Accordingly, we expect the government to continue spending on the expansion of its health facilities and equipping these with specialized medical equipment health infrastructure under the leasing programme.

With the growth envisaged above, the Government projects an increase in revenue collection to Ksh 2,080.9 billion up from Ksh 1,831.5 billion in the 2018/19 fiscal year.

This revenue performance will be underpinned by on-going reforms in tax policy and revenue administration.

FE

AT

UR

E

By Gideon Rotich


33


33

By December 2018 (half year), total revenue collection amounted to Ksh 794.7 billion against a target of Ksh 855.7 billion.

Overall, the implication of the under-performance of revenues, if it persists to June 2019, is possible revision of government spending or increased borrowing. The principal dilemmas are how this revenue deficit will be bridged and whether the Kenyan taxpayer will have to dig deeper into her pockets.

What Tax changes were expected?

As part of the reforms in tax policy and administration, there has been a deliberate move over the last seven years to modernize the major tax laws.

Today, we have a new VAT Act, Excise Duty Act, Miscellaneous Levies Act, Tax Procedures Act and the Tax Appeals Tribunal Act. We expect the CS to table the much awaited Income Tax Bill to overhaul the current ITA which was enacted in 1974 and has undergone a lot of piecemeal amendments which have in some instances resulted in inconsistencies and led to ambiguity in the legislation.

Early last year, the National Treasury released the draft Income Tax Bill and invited stakeholders to give their comments before publication and tabling of the Bill in parliament.

Though the draft Bill has done away with the confusion created by the previous piecemeal amendments and provided greater clarity and has made the legislation simple and easy to comprehend, the National Treasury may have missed an opportunity to fundamentally reform the basis of taxation of income.

Some of the reforms expected include aligning the Income Tax law with accounting standards and other regulations such the Central Bank of Kenya Prudential Guidelines, aligning the law with the income tax laws for member states in East African Community (“EAC”) and incorporating international best practice from global bodies such as the Organisation for Economic Cooperation and Development (OECD).

The ability to collect taxes is central to a country’s capacity to finance social services such as health and education, critical infrastructure such as electricity and roads, and other public goods.

There is ongoing debate among different policy makers and civil society on the realistic measures to increase internally generated funds even as the KRA continues to miss achieving its budget year in year out.

The biggest paradox is on who is currently excluded from the tax bracket and what practical ways should be adopted to ensure that the domestic tax base is widened without hurting the already- burdened traditional tax sources and cause further social discomfort.

We expect an increase in the number of taxpayers with the recent implementation of VAT reconciliation by the KRA that seeks to match input tax claimed by buyers of taxable services/goods to the corresponding output tax charged by sellers of the goods/services.

This use of data analytics by the KRA is commendable and is in line with the global technology trends. The use of data analytics is also aimed at managing tax leakage and improving efficiency in KRA’s audits.

Other measures being undertaken by the KRA to broaden the tax base, prevent tax avoidance and evasion include implementation of Base Erosion Profit Sharing (BEPS) action plans comprising of sharing of information with other tax authorities, deactivation of inactive Personal Identification Numbers (PIN), introduction of withholding VAT and withholding rental income agents, increased and intelligence driven audits and various changes in legislation.

However, some of these reforms in tax policy and revenue administration have negatively impacted business operations. Case in point is the re-introduction of WH VAT requiring appointed WH VAT agents to withhold six per cent of the value of taxable

supplies on payment to suppliers and remit the same directly to theKRA.

The balance of the invoice amounts, inclusive of 10 per cent VAT, is paid to the customers. The amount withheld is received via WH VAT certificates to be claimed as VAT credits in the following tax period’s VAT return.

These VAT credits have negatively impacted some of the businesses cash flow position since the VAT Act does not provide for a mechanism of applying for cash refunds on account of excess input tax arising out of WH VAT.

To this end, the government is expected to either abolish the WH VAT regime or provide for a mechanism within which taxpayers can apply for cash refunds of excess input tax arising out of WH VAT.

Accountability and transparency must follow the budgetary process all through to expenditure. There is need for public expenditure reforms so as to improve efficiency and effectiveness in utilization and execution of the budget.

The government continues to adopt a policy of austerity measures aimed at eliminating wastage so as to release more resources from recurrent expenditure to development.

The Government has further scaled up the fight against corruption by implementing various legal, policy and institutional reforms in order to seal the loopholes used to embezzle public funds.

The recent arrests and prosecutions of persons including senior Government officials, business persons, and ordinary Kenyans alike sends a strong message that engaging in corruption attracts dire consequences.

There is a real need for public expenditure reforms so as to improve efficiency and effectiveness in utilization and execution of the budget. It remains to be seen what revenue measures the government has set up to meet the ever- expanding budget.

The Constitution of Kenya provides for a framework of public participation in the budget making process which presents an opportunity for both individuals and the business community to lobby for favourable tax environments.

Gideon Rotich is the Senior Manager - Tax

Services at PricewaterhouseCoopers Limited

FE

AT

UR

E


34

2nd Quarter, April - June 2019G

UE

ST

CO

LU

MN

For the management of a petroleum company, sometimes one question comes up when they read the

reconciliation report; why is the loss rate so high and where is the fuel?

Although the same questions are often brought up by fuel station managers, it is a headache trying to find the answer through the daily notes recorded manually. In fact, the total amount of the loss in the stations can be huge thereby lowering the margins of the company in a competitive business environment.

How to manage the stations more efficiently and securely is a global issue to station owners and their managers.

But it is always an ultimate fight between the management and maloperations, delinquency and theft at the stations.

A combination of these factors can hurt the company through loss of fuel and harm customer relations when they are cheated on the liters. Eventually, it is the company’s reputation that is ruined. The loss that an oil company suffers can be as a result of several factors from the time the oil is being discharged to the tanks to the point where it is dispensed to the customers. The accuracy of the volume of oil discharged and stocked is equal to the amount of money we put into our bank account, which should be duly checked and assured.

However, for many stations, the current way of measuring the tank storage is through manual dipping, by which the deviation can happen due to many reasons such as temperature, the precision of the ruler and the operation of the staff.

Also, making sure the tank volume table is well made by advanced calibration is by all means critical to the gauging operation.

Total automation solutions to safeguard your fueling business

By Ji Peng

Leakage problem can be another source of trouble. The only way to resolving this issue is to find it out and determine the source of leakage at the earliest possible time, whether it happened on the tank, on the pipeline or on the dispensers. Over and above the earlier mentioned issues, the most complicated issue is on the dispensers, where most of the games are played.

Although the nozzle, flow meter, electronics, configurations are basic designs and functions for the fuel dispenser, they can become loopholes for the stealing of the fuel without proper surveillance and management.

The key questions are: How to win the war of revenue loss? How to maintain the image and good reputation to the customers? How to realize good management with lower cost, despite the distance between headquarter and the site? The answer and solution is without doubt - automation. Thanks to the evolution and upgrade of modern technology, it becomes much easier to monitor the performance of each dispenser and staff, to balance the storage and to do daily reconciliation. The core spirit of automation is to reduce human handling, to avoid maloperation and fraud, while all data and transactions by the pump side and tank side are

automatically transmitted to the head office, where the reports are automatically generated, and alarm functions are at your service all the time.

By systematic reconciliation, managers can easily establish the loss rate, and check abnormity through the record of transactions.

And automation system is an investment, the company will benefit from the rapidly increasing turnover considering the decrease of operation costs and avoiding fraud risk. Inspired by the internet technology and driven by global demand, Sanki has developed the total automation solutions to help our clients to solve the management problem, including the advanced fuel dispenser, automatic tank gauge system, mechanical/ tank calibration system, leakage detection and fuel management system.

All these products are designed and manufactured by Sanki Group and our aim is to meet all the managerial demands for the fuel stations and headquarter.

For the past 10 years, Sanki automation solution has been tested, installed and practiced in many countries, from single station work to national project. Being the professional manufacturer, designer, developer and contactor of the fueling solution for more than 20 years, it is Sanki’s mission to offer the best equipment and service to keep management of the stations under an effective and cost-efficient manner.

Meanwhile, with the communication between our team and clients, we can also provide professional consulting to particular problems facing clients, and figure out customized solutions.

The future is now. Embrace technology to win your fueling business from now on!

Mr. Ji Peng is the General Manager of Beijing

Sanki Petroleum Technology, Co., Ltd.

35


ST

AT

IST

ICS

Petroleum Taxes Import

Duty Excise Duty VAT Road Mainten.

Levy Petroleum Devel. Levy

Import Decl. Form

Remission Kshs/Litre

Adulteration Levy

Motor Spirit (Gasoline) Regular

- 19.505 8% 18.00 0.40 2.00% 0.45 -

Motor Spirit (Gasoline) Premium

- 19.895 8% 18.00 0.40 2.00% 0.45 -

Aviation Spirit - 19.895 8% - 0.40 2.00% 0.45 -

Spirit Type Jet Fuel - 19.895 8% - 0.40 2.00% 0.45 -

Special Boiling Point & White Spirit

- 8.500 8% - - 2.00% 0.30 -

Other Light Oils and Preparations

- 8.500 8% - - 2.00% 0.30 -

Partly refined (including topped crudes)

- 1.450 8% - - 2.00% 0.30 -

Kerosene type Jet Fuel - 5.755 8% - 0.40 2.00% 0.45 -

Illuminating Kerosene (IK) - 7.250 8% - 0.40 2.00% 0.45 18

Other Medium oils and preparations

- 5.300 8% - 0.40 2.00% 0.30 -

Gas Oil (automotive,light,amber for high speed engines).

- 10.305 8% 18.00 0.40 2.00% 0.30 -

Diesel Oil (ind heavy,black for low speed marine and stationery engines).

- 3.700 8% - 0.40 2.00% 0.30 -

Other Gas Oils - 6.300 8% - 0.40 2.00% 0.30 -

Residual Fuel oils 125 cst.

- 0.300 16% - 0.40 2.00% 0.30 -


- 0.600 16% - 0.40 2.00% 0.30 -


- 0.600 16% - 0.40 2.00% 0.30 -

Other residual fuels - 0.600 16% - 0.40 2.00% 0.30 -

Lubricating oils 25% - 16% - - 2.00% -

Lubricating greases 25% - 16% - - 2.00% -

Batching oils 25% - 16% - - 2.00% -

Butanes (Petroleum gases)

- - - - 0.40 2.00% -

Petroleum Bitumen 10% - 16% - 0.40 2.00% -

Bituminous or oil shale and tar sands

10% - 16% - 0.40 2.00% -

Bituminous mixures 10% - 16% - 0.40 2.00% -

SOURCE: KRAKRA to effect excise duty act 23 of 2015 provision on inflation adjustment on excise duty.

36

2nd Quarter, April - June 2019S

TA

TIS

TIC

S

Kenya Petroleum Sales

Market ShareOVERAL MARKET SHARE

(INCLUDINGEXPORTS) JANUARY - MARCH 2019

OVERAL MARKET SHARE(INCLUDING EXPORTS) JAN-MAR 2019

VIVO 14.4%

KENOL KOBIL 14.2%

TOTAL 13.0%

LIBYA OIL 5.4%

GULF ENERGY 4.9%

NOCK 4.4%

PETRO 4.0%

HASS 3.2%

BAKRI 2.4%

GALANA 2.1%

GAPCO 1.9%

ROYAL 1.8%

STABEX 1.7%

TEXAS 1.5%

RH DEVANI 1.5%

LAKEGAS 1.4%

FOSSIL FUEL 1.3%

TRISTAR 1.2%

KENCOR 1.1%

ASPAM 1.1%

ORYX 1.0%

TOSHA ENERGY 1.0%

AINUSHAMSI 1.0%

DALBIT 0.9%

TOWBA 0.9%

EAGOL 0.9%

LUQMAN 0.8%

ONE PETROLEUM 0.8%

ENGEN KENYA 0.8%

RIVAPET 0.7%

LEXO 0.7%

CITY OIL 0.7%

MOGAS 0.6%

MSOIL 0.6%

OLYMPIC 0.5%

AHARAMI 0.4%

AXON 0.4%

ILADE 0.4%

BUSHRA 0.4%

ASTROL 0.4%

RANWAY 0.4%

JAKLINE 0.4%

BANODA 0.3%

BACHULAL 0.3%

OCEAN ENERGY 0.3%

OILENERGY 0.3%

OILCOM 0.2%

FINE JET 0.2%

TIBA 0.2%

NETGAS 0.2%

AFTAH 0.2%

PETROCAM 0.2%

HELLER 0.1%

OTHERS 0.6%

TOTAL 100.0%

Products % Change July- Sept

2018

% Change Compared to April-June

2018

Jan-Sept 2018 Jan-Dec 2017

Avgas 64% 60% 334 -252% 1,977

Jet A-1 -11% -14% 172,269 -10% 510,362

Premium Gasoline 5% -2% 453,766 2% 1,333,064

Regular Gasoline -

Kerosene -37% -14% 101,920 -2% 318,326

Gas Oil 4% 0% 639,813 0% 1,912,294

Industrial Diesel 204 100%

Fuel Oils -111% -94% 83,788 -2% 346,493

Bitumen* -290% 34% 262 1% 691

Lubricants -5% -11% 13,387 8% 39,505

Greases* 100% 100% - 1,301

TOTAL -8% -9% 1,465,743 -1% 4,464,013

Units in M3

* Units in Metric tonnes

37


ST

AT

IST

ICS

Q2 vrs Q1 2018 Q1 RESULTS

Jan-Dec 2018

2018 % Change

Compared to 2017

Jan-March 2017

Jan-March 2018

% Change 2017 Vrs 2018 Q1

JAN-MAR 2019

2018 vrs 2019 Q1

2017 vrs 2019 Q1

2,007 2,056 2% 537 466 -15% 138 -238% -290%

879,243 722,214 -22% 178,399 215,537 17% 228,892 6% 22%

1,711,426 1,801,270 5% 415,247 453,564 8% 492,895 8% 16%

- -

533,794 374,939 -42% 142,646 118,763 -20% 58,912 -102% -142%

2,509,585 2,532,911 1% 622,874 642,419 3% 669,325 4% 7%

2,155 487 20 -2344%

603,843 435,284 -39% 145,866 166,033 12% 93,176 -78% -57%

1,770 1,555 -14% 117 171 32% -

52,402 52,259 0% 13,793 13,692 -1% 14,602 6% 6%

2 1,320 100% - - -

6,296,228 5,923,810 -6% 1,519,966 1,610,664 6% 1,557,940 -3% 2%

KENYA PETROLEUM SALES MARKET JANUARY - MARCH 2019

VIVO 19.0%

TOTAL 15.9%

KENOL KOBIL 14.8%

LIBYA OIL 6.9%

NOCK 5.9%

GULF ENERGY 5.5%

PETRO 3.0%

GAPCO 2.3%

HASS 2.2%

GALANA 2.1%

BAKRI 2.0%

TOWBA 1.2%

LAKEGAS 1.2%

DALBIT 1.1%

ASPAM 1.1%

ONE PETROLEUM 1.0%

ENGEN KENYA 1.0%

KENCOR 1.0%

ORYX 0.9%

TOSHA ENERGY 0.9%

LEXO 0.9%

RH DEVANI 0.8%

AINUSHAMSI 0.8%

FOSSIL FUEL 0.7%

EAGOL 0.7%

RIVAPET 0.6%

BUSHRA 0.5%

ASTROL 0.5%

TEXAS 0.5%

MOGAS 0.4%

TRISTAR 0.4%

LUQMAN 0.4%

BACHULAL 0.4%

ROYAL 0.3%

AFTAH 0.2%

OLYMPIC 0.2%

OCEAN ENERGY 0.2%

STABEX 0.2%

PETROCAM 0.2%

HELLER 0.2%

ILADE 0.2%

TIBA 0.2%

FINE JET 0.2%

OILCOM 0.2%

BANODA 0.2%

JAGUAR 0.1%

OTHERS 0.7%

TOTAL 100.0%

LUBRICANTS MARKET SHAREJANUARY - MARCH 2019

TOTAL 37.6%

VIVO 35.3%

LIBYA OIL 10.6%

KENOL KOBIL 10.2%

ORYX 2.2%

GALANA 1.8%

NOCK 1.0%

HASS 0.9%

ENGEN KENYA 0.3%

MOGAS 0.1%

TOTAL 100.0%

38


CIVIL AVIATION MARKET SHARE

KENOL KOBIL 64.8%

LIBYA OIL 13.9%

BAKRI 10.0%

GULF ENERGY 4.6%

TOTAL 2.0%

VIVO 1.6%

FINE JET 1.2%

HASS 0.8%

HELLER 0.5%

TRISTAR 0.5%

TOTAL 100.0%

RETAIL OUTLETS MARKET SHARE

VIVO 30.3%

TOTAL 22.7%

KENOL KOBIL 9.6%

NOCK 7.0%

LIBYA OIL 6.7%

PETRO 3.2%

GULF ENERGY 2.5%

LEXO 1.9%

LAKEGAS 1.6%

GALANA 1.5%

ASTROL 1.2%

HASS 1.2%

ENGEN KENYA 1.1%

RIVAPET 1.1%

TOSHA ENERGY 1.1%

LUQMAN 0.9%

AINUSHAMSI 0.7%

BAKRI 0.6%

BACHULAL 0.6%

STABEX 0.5%

EAGOL 0.4%

MOGAS 0.4%

TEXAS 0.4%

TIBA 0.4%

HELLER 0.3%

ILADE 0.3%

ORYX 0.3%

OILCOM 0.3%

ASPAM 0.2%

OLYMPIC 0.2%

EON ENERGY 0.2%

GAPCO 0.1%

TOWBA 0.1%

PETROCAM 0.1%

AXON 0.1%

OTHERS 0.1%

TOTAL 100.0%

EON ENERGY 0.1%

ELIORA 0.1%

HELLER 0.1%

OTHERS 0.1%

TOTAL 100.0%

RESELLERS MARKET SHARE

TOTAL 10.4%

VIVO 9.9%

GAPCO 9.0%

PETRO 6.6%

NOCK 5.5%

TOWBA 4.6%

GALANA 4.3%

LIBYA OIL 4.0%

KENCOR 4.0%

ASPAM 3.9%

GULF ENERGY 3.9%

ORYX 3.4%

FOSSIL FUEL 2.9%

BUSHRA 2.2%

ENGEN KENYA 2.1%

HASS 2.0%

DALBIT 2.0%

EAGOL 1.9%

LAKEGAS 1.8%

AINUSHAMSI 1.8%

TRISTAR 1.7%

TOSHA ENERGY 1.7%

TEXAS 1.3%

BAKRI 1.1%

AFTAH 0.9%

OCEAN ENERGY 0.9%

MOGAS 0.7%

KENOL KOBIL 0.7%

BANODA 0.7%

PETROCAM 0.6%

OLYMPIC 0.5%

FASTNET 0.5%

JAKLINE 0.4%

ILADE 0.3%

AXON 0.3%

OILCOM 0.3%

OILPRO 0.2%

BRAIN FIELD 0.2%

JAGUAR 0.2%

ASHARAMI 0.2%

HASHI 0.2%

GLOBAL 0.1%

TIBA 0.1%

RIVAPET 0.1%

OTHERS 0.1%

TOTAL 100.0%

BUSHRA 0.1%

ASHARAMI 0.1%

AMANA 0.1%

TIBA 0.1%

OTHERS 0.2%

TOTAL 100.00%

TOP INDUSTRY CONSUMERS

RETAIL OUTLETS 44.3%

RESELLERS 24.5%

CIVIL AVIATION 14.4%

MANUFACTURING INDUSTRIES

5.5%

OTHER COMMERCIAL SECTORS

4.1%

TRANSPORT & COMMUNICATIONS

3.4%

ENERGY PRODUCTION 1.8%

BUILDING & CONSTRUCTION

0.6%

MINING & OTHER NATURAL RESOURCES

0.5%

AGRICULTURE 0.4%

GOVERNMENT SERVICES

0.2%

TOURISM 0.1%

MILITARY 0.1%

Total 100.0%

SECTOR SHARESector Sales January - March 2019

ST

AT

IST

ICS

39


ST

AT

IST

ICS

SGS Fuel Marking and Tracing Service - Kenya

Executive Summary for July - September 2018

1. Sampling and Testing

The tables below indicate the number of sites tested during the month of July - September

and the number of positive sites found.

Table 1: Summary of sites sampled and tested per province for Kerosene Marker

Sites Tested Sites Found Positive

Province Independent Company Total Independent Company

Central 35 79 114 2 0 1.75%

Coast 12 29 41 6 0 14.63%

Eastern 39 86 125 2 0 1.60%

Nairobi 27 61 88 18 0 20.45%

North Eastern 6 4 10 0 0 0.00%

Nyanza 39 25 64 2 1 4.69%

Rift Valley 80 124 204 4 0 1.96%

Western 41 38 79 2 0 2.53%

279 446 725 36 1 5.10%

Table 2: Summary of sites sampled and tested per province for Export Marker

Sites Tested Sites Found Positive

Province Independent Company Total Independent Company

Central 35 79 114 2 0 1.75%

Coast 12 29 41 4 0 9.76%

Eastern 39 86 125 0 0 10.00%

Nairobi 27 61 88 5 0 5.68%

North Eastern 6 4 10 0 0 0.00%

Nyanza 39 25 64 3 0 4.69%

Rift Valley 80 124 204 2 0 0.98%

Western 41 38 79 1 0 1.27%

279 446 725 17 0 2.34%

SGS Fuel Marking and Tracing Service - Kenya

40


TA

TIS

TIC

S

Maximum pump prices (15th September to 14th October 2018)

PRODUCT MOMBASA NAIROBI NAKURU ELDORET KISUMU

Super Petrol 114.15 116.79 117.25 118.26 118.25

Automotive Diesel 105.5 108.12 108.81 109.81 109.81

Kerosene 105.78 108.41 109.1 110.09 110.09

Maximum pump prices (15th August to 14th Septmber 2018)


Super Petrol 124.49 127.8 128.46 129.64 129.71


Kerosene 94.61 97.41 98.22 99.29 99.29

Maximum pump prices (15th July to 14th August 2018)


Super Petrol 108.9 112.2 112.87 114.05 114.12


Kerosene 82.94 85.73 86.54 87.61 87.61

Maximum pump prices (15th June to 14th July 2018)


Super Petrol 105.51 108.81 107.86 109.05 109.11


Kerosene 81.31 84.1 79.05 80.12 80.12

Maximum pump prices (15th May to 14th June 2018)


Super Petrol 103.88 107.17 107.86 108.71 108.78


Kerosene 75.44 78.22 79.05 78.63 78.62

Maximum pump prices (15th April to 14th May 2018)


Super Petrol 103.54 106.83 107.53 110.67 110.74


Kerosene 73.94 76.72 77.56 85.99 85.98

Maximum pump prices (15th March 2017 to 14th April 2018)


Super Petrol 100.89 104.7 104.88 106.06 106.13


Kerosene 68.65 71.42 72.77 73.34 73.34

Maximum pump prices (15th Novemebr 2017 to 14th December 2017)


Super Petrol 99.42 102.7 103.42 104.6 104.67


Kerosene 68.46 71.23 72 73.15 73.15

Maximum pump prices (15th October 2017 to 14th Novemeber 2017)


Super Petrol 98.39 101.67 102.39 103.57 103.64


Kerosene 63.41 66.18 67.04 68.12 68.11

Maximum pump prices (15th september 2017 to 14th october 2017)


Super Petrol 95.08 98.3 99.04 100.22 100.29


Kerosene 61.63 61.63 66.3 66.3 66.3

PUMP PRICES

41


ST

AT

IST

ICS

Maximum pump prices (15th August 2017 to 14th September 2017)


Super Petrol 92.86 96.08 96.83 98.01 98.09


Kerosene 60.69 63.42 64.3 65.37 65.37

Maximum pump prices (15th July 2017 to 14th August 2017)


Super Petrol 93.87 97.1 97.84 99.02 99.09


Kerosene 59.83 62.56 63.44 64.51 64.51

Maximum pump prices (15th June 2017 to 14th July 2017)


Super Petrol 95.47 98.73 99.47 100.65 100.72


Kerosene 62.29 65.35 65.92 66.99 66.98

Maximum pump prices (15th April 2017 to 14th June 2017)


Super Petrol 96.32 99.59 100.32 101.5 101.57


Kerosene 62.52 65.28 66.15 67.22 67.22

Maximum pump prices (15th March 2017 to 14th April 2017)


Super Petrol 97.63 101.05 101.78 102.96 103.03


Kerosene 65.11 67.9 68.83 69.9 69.88

Maximum pump prices (15th February 2017 to 14th March 2017)


Super Petrol 96.85 100.27 101 102.18 102.25


Kerosene 64.64 67.19 68.06 69.13 69.12

Maximum pump prices (15th January 2017 to 14th February 2017)


Super Petrol 92.6 96.01 96.76 97.94 98.01


Kerosene 60.6 63.44 64.32 65.39 65.39

Maximum pump prices (15th December 2016 to 14th January 2017)


Super Petrol 90.8 94.2 94.96 96.14 96.21


Kerosene 67.1 63.56 64.43 65.8 65.5

Maximum pump prices (15th November 2016 to 14th December 2016)


Super Petrol 91.53 94.94 95.7 96.88 96.95


Kerosene 59.31 62.16 63.04 64.11 64.1

Maximum pump prices (15th October 2016 to 14th November 2016)


Super Petrol 88.16 91.56 92.33 93.51 93.58


Kerosene 55.87 58.71 59.6 60.67 60.62

42


TA

TIS

TIC

S

Crude Oil Analysis

Month -2016 Mean Exchange Rates (KES/US$) Crude Prices

August 101.80 44.87

September 101.50 45.04

October 101.20 49.30

November 101.83 45.26

December 102.45 52.26

17-Jan 103.99 53.59

17-Feb 103.55 54.35

17-Mar 102.97 50.90

17-Apr 103.11 52.16

17-May 103.21 49.89

17-Jun 103.27 48.86

17-Jul 103.74 49.56

17-Aug 103.28 48.45

17-Sep 103.12 52.95

17-Oct 103.35 54.92

17-Nov 103.24 62.71

17-Dec 103.28 64.32

18-Jan 102.4 69.08

18-Feb 101.9 64.15

18-Mar 101.3 63.91

18-Apr 63.22

18-May 68.43

18-Jun 65.81

18-Jul 65.54

18-Aug 66.94

18-Sep

18-Oct

18-Nov

18-Dec

CRUDE OIL PRICE TREND

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

99.50 100.00 100.50 101.00 101.50 102.00 102.50 103.00 103.50 104.00 104.50

Au

gu

st

Sep

tem

be

r

Oct

ob

er

No

vem

be

r

De

cem

be

r

17

-Ja

n

17

-Fe

b

17

-Ma

r

17

-Ap

r

17

-Ma

y

17

-Ju

n

17

-Ju

l

17

-Au

g

17

-Se

p

17

-Oct

17

-No

v

17

-De

c

18

-Ja

n

18

-Fe

b

18

-Ma

r

KSHS/CRUDE TREND

Mean Exchange Rates (KES/US$) Crude Prices

43


ST

AT

IST

ICS

Breakdown of the costs of Super Petrol (PMS, Diesel (AGO) and Kerosene (DPK) in Nairobi

15th March 2019 - 14th April 2019

Cost Item Super Petrol Diesel Kerosene

KShs/Litre KShs/Litre KShs/Litre

Lande Costs (a) 42.57 47.09 51.01

Pipeline Transport (Msa-Nrb) 2.35 2.35 2.35

Road Transport (Msa-Nrb) - Bridging 0.00 0.00 0.00

Pipeline Losses 0.09 0.08 0.08

Depot Losses 0.41 0.23 0.25

Delivery within 40kms of Nrb 0.54 0.54 0.54

Distribution and Storage (b) 3.39 3.20 3.22

Importers Margin 7.00 7.00 5.57

Dealers Margin 3.89 3.89 3.89

Oil Marketing Companies's (OMC) Margin(c ) 10.89 10.89 9.46

Excise Duty Tax 19.90 10.31 10.31

Road Maintenance Levy Levy 18.00 18.00 0.00

Petroleum Development Levy Levy 0.40 0.40 0.40

Petroleum Regulatory Levy Levy 0.25 0.25 0.25

Railway Development Levy Levy 0.61 0.67 0.74

Anti-adulteration Levy Tax 0.00 0.00 18.00

Merchant Shipping Levy Levy 0.02 0.03 0.02

Import Declaration Fee Levy 0.81 0.90 0.98

Value Added Tax (VAT) Tax 4.51 4.87 5.07

Taxes and Levies (d) 44.50 35.43 35.77

Retail Prices in Nairobi (a) + (b) + (c ) + (d) 101.35 96.61 99.46

Summary Super Petrol Diesel Kerosene

KShs/Litre KShs/Litre KShs/Litre

Products Costs (a) 42.57 47.09 51.01

Distribution and Storage Costs (b) 3.39 3.20 3.22

OMC Margins (c ) 10.89 10.89 9.46

Taxes and Levies (d) 44.50 35.43 35.77

Retail Prices in Nairobi 101.35 96.61 99.46

ERC PETROLEUM PRICES

SOURCE: ERC

44


TA

TIS

TIC

S

44

Source; PIEA

Response Centre Location

Centre in-charge Container Equipment

Company Name

Response Team Leader

(St. John)

Inventory build and short fall

established

EquippingAvailable Branded

Name

1 Jomvu Total Kenya Francis Saha Paul Osiolo YES YES YES YES

2 Voi Petro Oil Saul Amuhaya Donald Makhala YES NO NO NO

3 Mtito Andei Oilibya George Aika Beatrice YES YES YES NO

4 Sultan Hamud National Oil Freda Mbogo Titus Nyamai YES YES YES YES

5 Kyumvi Engen Musyoki Ngumii Tobias Taiwan YES YES NO NO

6 Kangemi Vivo Energy Stephen Muchoki Judith YES YES YES YES

7 Kinungi Kenol Kobil James Mutisya John Karanja YES NO NO NO

8 Naivasha Galana Samuel Githinji Francis Kingori YES YES YES YES

9 Sachangwan Gulf Energy Job Arasa Kennedy Kiptur YES YES YES YES

10 Molo (Salgaa) Total (K) Ltd Francis Saha Kennedy Kibet YES YES YES YES

11 Kericho (Kaitui) Hass Petroleum Andronico Ngiela Davies YES NO NO NO

12 Kisumu (Awasi) Oryx Energies Edward Ruto Charles Okoko NO NO NO NO

13 Busia Trojan International Johnson Sunyai Ernest Omusula NO NO NO NO

14 Eldoret (Burnt Forest) KPC Immaculate Musangi Meshack NO NO NO NO

15 Webuye Vivo Energy Stephen Muchoki Philip Wekesa YES YES YES YES

16 Malaba Hashi Energy Damaris Mutua Kenoz YES NO NO NO

45


are supplied including all embedded images within.

All information and images should be supplied in CMYK modeand 300dpi resolution.

• OtherPages:95,000.00



FUELING

www.petroleum.co.ke

2nd Quarter, April - June 2018The Magazine of the Petroleum Institute of East Africa 4th Quarter, October - December 2018

the Skies

INS

IDE

EAGOL opens ultra-modern service station in

Eldoret

Startupper of the Year Challenge - Second

Edition

Remove the nightmare of losses and

gains

Upstream Activities

www.petroleum.co.ke

2nd Quarter, April - June 2018The Magazine of the Petroleum Institute of East Africa

CURBINGCOUNTERFEITS

ANDILLICIT TRADE

INS

IDE

3rd Quarter, July - September 2018

TOTAL Motor Show 2018 Local content milestones

Regional news Market data

Bruce House, 4th Floor, Standard streetP.O. Box 8936, 00200 Nairobi

Tel: 249 081, 313 046/7Fax: 313 048

Mobile: 0722-221120Website: www.petroleum.co.keEmail: [email protected]

To Advertise Contact:

Alison and Davis Group Ltd

6th Floor, Town House

Kaunda Street, Nairobi

Tel: +254 20 232 0083/ 0723 242 440

Mobile: +254 721 845 944

Alt Email:[email protected]

Website:www.adgafrica.com

www.afripetequipment.com

Notes:

10% Discount for PIEA Members

5% off on annual bookings

15% Discount for PIEA

members on annual contracts

The above rates are per issue,

exclusive of VAT.

Advertising Rates (Kshs)Back Cover : 180,000

Front Inside Cover: 165,000

Back Inside Cover: 160,000

Double Spread: 250,000

Full Page Inside (Pgs 1 – 17): 140,000

Other Pages: 120,000

Half Page : 90,000

Petroleum Insight is the

official journal of the Petroleum

Institute of East Africa (PIEA).

Since its inception fifteen years

ago, it has become a consistent

and reliable chronicler of

developments between the oil

and energy industry.

46


the magazine of the petroleum institute of east africa 2...

Documents