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Govt seeks up to $500 M loan to build fuel pipeline

17 February 2014, 17:57

Nairobi -  The government is seeking $400 million to $500 million in loans to pay for the construction of a new fuel pipeline from the port of Mombasa, east Africa's trade gateway, to Nairobi.

Tender documents by the Kenya Pipeline Company (KPC) seen by Reuters on Monday said that the bigger pipeline would replace an older one and was designed to help meet demand for petroleum products in the region.

KPC said the project would be financed through the company's internally generated funds and an external borrowing limited to between $400 million and $500 million. Details of the total cost of the entire project were not immediately available.

"The key objective of this project is to replace the existing Line 1 with a suited pipeline size to meet the projected demand of petroleum products in Kenya and the Eastern Africa Region up to year 2044," the company said.

KPC has said the existing pipeline linking Mombasa to Nairobi that has outlived its 30-year lifespan and is prone to ruptures.

Many of the products from east Africa's only refinery in Mombasa have to be trucked to countries in the region, which is slow and unreliable owing to the breakdown of trucks and damaged roads.

The existing pipeline runs from Mombasa to Nairobi and then on to the town of Nakuru in the west before splitting with forks to the towns of Eldoret and Kisumu.

Kenya and Uganda also hope to revive plans to extend the pipeline past Eldoret to Uganda's capital Kampala, a distance of about 350 kilometres.

- Reuters


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