KPC eyes Kipevu trading hub to boost revenue to Ksh.68 billion by 2030

Kenya Pipeline Company (KPC) closed the financial year with a net profit of Ksh.11.58 billion, up from Ksh.10.24 billion a year earlier.

The increase follows a year in which the company transported 10.6 billion litres of petroleum products, with volumes destined for Kenya and neighbouring markets growing by 7 per cent.

That additional business helped lift revenue by 9 per cent to Ksh.43 billion. Profit before tax rose 8 per cent to Ksh.17.54 billion.

“From a cost perspective, we have tried to drive a cost-conscious culture of spending where it matters, but of course, the direct costs increased slightly by 8 per cent due to some of the variable costs of maintenance and electricity due to the higher volumes that we are pushing across the pipeline,” KPC Ag. Finance General Manager Antony Ndegwa stated.

The stronger earnings were accompanied by increased cash generation and lower debt. Borrowings fell 83 per cent to about Ksh.443 million, while cash generated from operations reached Ksh.17.39 billion.

Shareholders are in line for a dividend of 32 cents per share, amounting to a total payout of Ksh.5.9 billion.

“I would say KPC is very resilient. If you look at the year that has passed, this profit was delivered in a year that we experienced quite high oil prices, informed by the international prices,” KPC Ag. Managing Director Pius Mwendwa said.

While transporting fuel remains the company’s biggest source of income, KPC is looking to build a larger business around the cargo passing through Mombasa. Its proposed Kipevu trading hub would use the facilities of Kenya Petroleum Refineries Limited, the former refinery now wholly owned by KPC.

The plan is to provide a base where petroleum traders can store fuel, supply ships and organise shipments for other markets. These services would give KPC additional income from handling and storing petroleum products.

“We intend to develop a trading hub with world-class transhipment, bulk breaking, bunkering and re-export services for the regional markets,” KPC Chair Faith Bett-Boinett noted.

The company sees the planned Dangote refinery in Lamu and Gulf Energy’s South Lokichar oil project as opportunities to grow the petroleum trading hub business.

It is also pursuing plans to extend its pipeline from Eldoret to Kampala, and later Kigali, improving its access to regional customers.

For years, the Kenya Pipeline has moved fuel from the coast to markets across East Africa. Now, the company is setting out to make Mombasa a bigger, more lucrative centre, with the Kipevu trading hub at the heart of its plans to generate up to Ksh.68 billion in annual revenue by 2030.