KPC inefficiency in Eldoret pushes Rwandan fuel transporters to Dar

Loading challenges and congestion at the Kenya Pipeline Company’s (KPC) depot in Eldoret are the key reasons why Rwanda’s fuel transporters prefer to incur higher costs by using the Dar es Salaam port, fuel dealers say. The Kigali-Dar route is nearly 1,460 kilometres, compared to the relatively shorter Kigali-Eldoret route of about 860 kilometres. “A fuel truck to Dar will spend a week on average while it spends more time when it goes to Eldoret,” said Jeanette Kayitesi, Finance Manager at ENGEN Petrol Station. Robert Opirah, the Director General for Trade and Investment, at the Ministry of Trade and Industry, agrees. Over 90 per cent of Rwanda’s fuel comes in through the longer route, he said. “In Dar, there are many private depots and traders go to whichever they want and trucks are loaded immediately. In Kenya [Eldoret], there is heavy traffic jam due to the export market as well as domestic consumption. The huge metropolitan cities in western Kenya usually get served first,” he explained. “Then there is traffic to Uganda which gets almost all its fuel imports from Kenya. Uganda has more demand than Rwanda and DR Congo. Then there will be trucks from South Sudan yet Eldoret has one publicly managed depot, unlike in Dar where there are several private depots”. The Dar route is also preferred because it entails crossing only one international border, hence less paperwork, Opirah said. “For petroleum products to move the long distance in a huge pipeline from Mombasa to the two terminal points in Kisumu and Eldoret, pipes must be full to generate enough pressure. When, for example, most fuel is consumed by the big demand in Nairobi, the remainder is not enough to be pushed all the way to Eldoret,” Claudien Habimana, Managing Director of Societe Petroliere Ltd (SP), told The New Times. “This leads to delay sas more fuel has to be pumped first. In addition, petroleum batches are scheduled in a way that today they could pump diesel, tomorrow a different product and so on and so forth. Given this kind of schedule, those who want it have to wait till it reaches western Kenya.” “And even then, when the product is insufficient it can’t be pumped. It probably might not reach Eldoret but reach Nakuru. One would, therefore, be required to load from Nakuru but this also calls for another approval from customs officials. This results into incurring of extra costs,” Habimana said. Market share Before trucks are loaded at Eldoret, market share considerations put Rwandan bound cargo at a disadvantage. Habimana explained: “If, for example, my market share is 2 per cent, when loading the trucks, they know that the likes of Total, Shell, Viva, and others are waiting to load and then an estimation is done on how much fuel is available. If there are 200 trucks lining up, they consider the companies’ market share. “If Total has a bigger market share, it means they have more fuel coming from Mombasa. If SP’s market share is small, they only load a maximum of two trucks per day yet there are more than 20 trucks waiting,” Habimana said. “ But in Dar es Salaam the situation is different. When a ship arrives in Dar, it immediately offloads into the many depots there and I can load as many trucks as I want. For example, there are times when SP loads 100 trucks per day”. ‘‘SP refuels all diesel-powered electric generators in Rwanda and these consume 50 trucks in a week. “If we went to western Kenya, things wouldn’t work since even pump stations would experience shortages and, in addition, there would be power shortage here,” he explained. While 60 trucks can be loaded in Dar in a single day, if one opted for the shorter Kenya route, the maximum trucks they could load a day “would not go beyond three.” No negotiation As if market share and loading hitches were not enough, Habimana says, even though Dar is far, fuel transporters on that route can negotiate a price reduction, but in Kenya, from Mombasa to Eldoret, there is a government owned pipeline and the price – $65 per cubic meter plus VAT – “which is fixed and non negotiable.” “But, between Dar and Kigali, one can negotiate and get a better rate than western Kenya to Kigali.” According to Habimana, in Dar, a truck owner with more than 600 trucks agrees to load and transport 60 trucks for SP every day as he is sure of steady and reasonable cash flow, but in western Kenya, truck owners have a “bad deal” due to loading one truck in a day. “In western Kenya, a truck can spend two weeks waiting to load while the one that went to Tanzania has made two trips already,” Habimana said. Fuel transporters earn from every cubic meter of fuel transported. Opirah said: “The more trips they make, the more money earned and that’s why they prefer to go to a port that is more efficient. “In 2008, during the post election violence in Kenya, two of our trucks were burnt. A railway line was uprooted. At the time, we were using only the Mombasa route. That is when we chose the Dar es Salaam route which had a poor road network by then”. Presenting some of the challenges during an event in Mombasa in April, Flora Okoth, a Senior Manager at KPC, said that, among other challenges was unreliable power supply which resulted in frequent power outages. Product supply was another challenge at the depot which also serves western Kenya and neighbouring countries of Uganda, Rwanda, Burundi, DR Congo and South Sudan. Okoth admitted that customs clearance processes also slow down evacuation of products from KPC system leading to congestion of trucks in the depots resulting in safety and security threats. To find a solution, KPC was engaging Kenya Revenue Authority on improvement of clearance procedures, among others. Opirah said Rwanda’s downstream petroleum policy permits the use of two routes so that in case there are problems along one, the economy does not suffer as it did during Kenya’s 2007-2008 post-election violence. editorial@newtimes.co.rw

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KPC inefficiency in Eldoret pushes Rwandan fuel transporters to Dar