State-run Kenya Pipeline Corporation (KPC), the firm which supplies refined crude oil throughout the eastern Africa region, said Wednesday it required an urgent capital injection of 88 million U.S. dollars to expand its oil supply capacity.
KPC Managing Director George Okungu told a news conference in Nairobi that it requires 145 million dollars over the next five years to improve its service provision in the region, starting with the plans to improve the pipeline's pumping capacity and the plans to construct a new oil jetty in the western lakeside city of Kisumu.
Okungu warned that the regional economies, mainly Uganda, Tanzania, Rwanda and the Democratic Republic of Congo, which rely on refined oil products from Kenya, would suffer if the pipeline extension were not done soon.
The oil pipeline company said increased consumption of petroleum products in the Eastern Africa region has put pressure on the existing pipeline installation and it needed to undertake " immediate capacity enhancements" to meet demand within the short- term.
"If KPC does not meet this growing demand within the medium term, service delivery in the Kenya and regional economies is likely to be severely compromised," Okungu told journalists in Nairobi.
Kenya and Uganda are currently pursuing a joint pipeline extension project aimed at getting the oil pipeline to Kampala from the Kenyan fifth largest town of Eldoret, a distance of about 300 km. The oil pipeline currently extends from Mombasa.
Experts have proved the viability of the pipeline extension project and consultations with a possible joint venture partner to run the pipeline are currently underway.
"The two governments (Kenya and Uganda) will make a final decision soon," Okungu told a news conference in Nairobi. "The negotiation process is going on after the completion of the valuation process," he added.
Okungu said the funds would also enable the firm to effectively inject capital in the proposed pipeline extension project.
The Kenyan company plans to build an oil storage facility in Kigali, Rwanda, a major user of the refined petroleum products from Kenya.
"These substantial sums of money need to be carefully planned for and reserved from now on so that these critical investments can be funded," said Mwanyengela Ngali, KPC board chairman.