State-owned Kenya Pipeline Co., which the East African state is listing through an initial public offering, plans to triple capital expenditure on projects to widen its network, increase storage and diversify into natural gas.
The company plans to spend 110 billion shillings ($852.6 million) over the next five years, more than three times the 34 billion-shilling outlay between 2021 and 2025, according to the IPO prospectus for the sale of a 65% stake.
It will raise the financing through “a combination of internally generated cash flows and innovative financing structures including access to debt capital markets, special purpose vehicle project financing, joint ventures and partnerships,” the listing document said.
KPC is retaining none of the $824 million raised from the sale. The Kenyan government will instead utilize the proceeds to capitalize an infrastructure fund for its planned mega projects.
KPC’s projects includes a new pipeline from the Rift Valley city of Eldoret to Uganda’s capital, Kampala, and onward to Rwanda. In addition, it will build an oil trading hub in Mombasa.
The port city is the future site of a bulk natural gas handling facility for imports from Tanzania for power generation. The company plans additional storage facilities for Kenya’s strategic petroleum reserves.
KPC intends to commercialize a power plant located at the defunct Kenya Petroleum Refineries Ltd. plant to supply electricity to the grid, in addition to solar farming.
A crude refinery shut in 2013 will be converted into a biofuel refinery to produce blending components and sustainable aviation fuel. Eni SpA is undertaking studies on the proposed venture, according to KPC.
Uganda’s plans for a refinery to be operation by 2030 poses “a significant risk to KPC in terms of its regional expansion strategy,” it said.
“It will take a long time for the Eastern African regional market consumption levels to justify crude refining scale and margins at the best world oil markets level. Landed refined oil will remain more competitive into the long term,” according to KPC.
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