Kenya Pipeline Company Managing Director Macharia Irungu. FILE PHOTO | NMG Kenya Pipeline Company (KPC) revenues dipped by Sh5.4 billion in the period ended June last year in the wake of reduced tariffs for transport of fuel to neighbouring countries and declined sales due to Covid-19 disruptions.
KPC’s financial report for the year to June 2020 shows that the State agency recorded Sh26.1 billion in revenues, down from Sh31.5 billion the previous year.
The decline came at a time Kenya cut tariffs for use of the pipeline to win back importers from landlocked countries to its network who had opted to move oil through Tanzania due to the high charges on KPC’s line.
Demand for fuel also grew at a slower pace compared to the previous year due to the coronavirus disruptions that hurt consumption.
“This decline is largely attributed to the downward revision of pipeline tariffs by Energy and Petroleum Regulatory Authority (Epra) by between 19 percent and three percent for local sales and 48 percent and 33 percent for export sales respectively,” KPC managing director Macharia Irungu said.
Epra cut tariffs for use of Kenya’s pipeline by more than 50 percent in 2019, a move that KPC opposed and sought Parliament’s help to reverse.
Epra set the rate at Sh3,089 ($30.89) per 1,000 litres of transit fuel from the Sh6,000 ($60) for the same volume in the new tariffs that were aimed at winning back fuel exporters to neighboring countries.
The rates fell further to Sh3, 065 ($30.65) last year and later to Sh2,907 ($29.07) this year even as KPC warned that its revenues would take a significant hit. KPC told Parliament that it was forced to revise downwards its targeted revenues for the period to June last year from Sh28 billion to Sh22 billion in the wake of the tariff cuts.
The State agency had proposed tariffs at Sh4,635 per 1,000 litres for the export market and various increases in all the local market tariffs. However, KPC’s profit increased to Sh3.9 billion from Sh2 billion posted in the year to June 2019.