Kiraitu Murungi, Kenya's energy minister who was in Mumbai to sign an MoU with Bharat Petroleum Corporation (BPCL), said, "Crude oil is getting costlier and the Kenyan government invites participation from the Indian companies in its energy sector to come and explore."
Essar Energy Overseas, a subsidiary of Essar Oil, is already in talks with the Kenyan government to acquire 50 per cent stake in Kenya Petroleum Refineries (KPRL), a four-million tonne per annum (MTPA) refinery in Mombasa. The government holds the remaining 50 per cent stake in KPRL.
Since wood fuel accounts for about 70 per cent of Kenya's energy, Kenya is looking at measures to shift the pattern of energy consumption to electricity and petroleum in order to protect the environment and to provide energy forms necessary for economic growth. Petroleum and electricity currently account for only 21 per cent and 9 per cent, respectively.
"LPG is a clean and environment friendly fuel we want to invest in," said Murungi. Petrol in Kenya costs around Rs 67 a litre ($1.6), while LPG costs anywhere between Rs 1,500-1,800 per 12 kg cylinder.
Kenya's petroleum sector was deregulated in late 1994. The sub-sectors, however, could not be fully deregulated due to the market's dependence on Kenya Petroleum Refinery for liquefied petroleum gas and the absence of a viable infrastructure for its import.
More From This Section
Therefore, the government requires oil companies to import and process crude oil to satisfy demand.
Kenya Pipeline Company, a 100-per cent subsidiary of the Kenya government, has tied up with state-run BPCL for the construction of a LPG importing, handling, storage plant and a bottling facility at Nairobi and Mombasa, respectively.
The facilities require an investment of Rs 504 crore ($12 million) and Rs 1,680 crore ($ 40 million) and begin operations in the next few months.