This archive report was first published on 28 November 2019.
Kenya Pipeline Company (KPC) is bracing for a significant revenue shortfall of Sh19 billion following the recent cuts in pipeline tariffs. The State utility's bottom-line is expected to take a hit of Sh6 billion in the year to June and a further Sh13 billion in the 2020/21 period.
According to KPC chairman John Ngumi, the new tariffs will cut the company's revenues by Sh19 billion, with the forecast coming as KPC tussles with the Energy and Petroleum Regulatory Authority (EPRA) over the regulator's decision to cut the tariffs by more than 50 percent.
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 announced last month. The rates will fall to Sh3,065 ($30.65) in 2020 and later to Sh2,907 ($29.07) in 2021.
Appearing before the National Assembly committee on Energy, the KPC board expressed concerns that the revenue shortfall could force the company to struggle with debt servicing and potentially lead to the non-renewal of a leasing deal for storage facilities.
Mr. Ngumi stated that KPC had appealed to the government to reverse the cuts, and that the government was currently reviewing the proposals.
