Energy firm goes into gas manufacturing
17 April 2013, 12:13
Nairobi- An East Africa-based energy firm has invested Sh850 million in a gas cylinder manufacturing plant in an attempt to end the region's over-reliance on imports.
Allied East Africa expects to tap into the growing demand for Liquefied Petroleum Gas (LPG) in Kenya and the region, currently dominated by imports.
The region imports an estimated 90 per cent of the gas cylinders.
The plant located in Kitengela on the outskirts of Nairobi has an optimum production capacity of 3,000 cylinders a day and is expected to start operations in June.
The firm will manufacture both industrial and domestic gas cylinders and market them to companies selling LPG, which includes oil-marketing companies.
Firms marketing LPG import bulk cylinders they sell in Kenya and the region. The plant also has equipment to re-validate or repair worn out cylinders.
“The facility is complete and we are planning to start operations by June,” the firm’s managing director, Hamza Ali says.
He says the company is looking at tapping into the regional market where use of LPG is still low, but there is a potential.
“We will undertake production in Kenya and work with distributors in the other countries,” said Ali.
The firm is also looking at selling across East Africa Community member countries as well as markets like DRC, Somalia and Ethiopia.
He said the firm will adopt an agency distribution model where it will recruit distributors in the other markets.
A deal with a local financial institution has partly financed the setting up of the plant and the rest by investors.
Ali hopes that local manufacturing firms will over time grow to cater for up to 50 per cent of the gas cylinder needs in the country and region.
– CAJ News