Vivo Energy Kenya has opened two new fuel storage tanks at its Mombasa depot that will help reduce the cost of petrol in its outlets in the country.
The tanks opened on Wednesday will help increase the company’s petrol storage capacity to 22 million liters, ensuring a steady and ready supply needed as a result of significant retail business growth.
According to Mr. Polycarp Igathe, Vivo Energy Kenya Managing Director, the extra storage capacity will enable them reduce demurrage costs as there will be fewer fuel tanker discharges and this will be a good advantage to the consumer at the end.
“In the price formula of ERC there is a cost element called demurrage;it is the cost Kenyans pay when you fuel your car, for ships waiting at the berth because there is no space to pump the fuel to .So with these extra storage capacity we will reduce the level of these costs for the consumers,” Said Mr. Igathe
He also added that the additional storage will increase the company’s flexibility to support inland markets like Uganda.
Investments in Africa.
Mr. Christian Chammas, Vivo Energy Group CEO, who was also at the event, reaffirmed the company’s commitment to growing all its businesses in Africa:“We are investing around $300m over the next three years to build new service stations and refurbish existing ones so that our customers can receive high quality fuels and lubricants. I am delighted to see this tank project successfully and safety completed.”
According to Vivo Energy Kenya, petrol consumption at Shell service stations has grown from an average of 11 million litres to an average of 20.8 million litres per month, an 87% growth since November 2012 when the company was formed to distribute and market Shell branded fuel and lubricants.
The increase of petrol consumption created the need for additional fuel storage that is now in place.
Fuel cost and depreciating Kenya shiling.
Mr. Igathe also requested the Energy Regulatory Commission(ERC) to increase the whole sale margin of petrol by about a shilling as failure to do so, will see very few players left in the oil marketing industry which may lead to job losses.
Igathe added that at the moment, the margin is only Ksh.7 and with 16% depreciation of the Kenyan shillings and the interest rates going upto 25%, they are not getting good returns in investments.