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Kenya to convert refinery into storage facility

The Kenya government has decided to abandon the search for a new partner for its troubled refinery and opted to convert the plant into a storage facility.

The loss-making facility has had a troubled past, leading its Indian partner Essar Energy to withdraw claiming that it had realised that the project would not be profitable.

“We decided that the refinery should be turned into a storage facility because it is old and now inefficient,” Kenya’s Commissioner in charge of petroleum, Martin Heya told Oil in Uganda by phone.

The refinery’s performance has been poor in the past, largely due to its outdated technology and high costs of operation.

The Energy Regulatory Commission (ERC) announced in April that the refinery had made a loss of about $ 150 million in the last two years.

No job losses

In April, hundreds of workers at the embattled refinery protested against reports that the government was going to shut it down.

However, Heya insists that the government was currently working on a strategy to retain all the plant’s workers.

“No one is going to be fired,” he said, “In fact, they are being paid their salaries even though no major activities are ongoing in the facility,” he added.

Meanwhile, Kenya is pressing ahead with plans to construct another refinery at the port of Lamu, north of Mombasa.

Report by Beatrice Ongode