OVERVIEW OF THE OIL AND Fuel SECTOR IN KENYA

Orifice rippleWe are able to solely expect that because the Kenyan economy grows and increases in complexity consumption will proceed rising in the direction of global averages. 4

5 Growing Nationwide Consumption Local petroleum demand has been growing during the last decade and extra. On the financial growth charge of 10% desired in order to attain Vision 2030, it’s projected consumption will develop from four.5 million MT presently to 12 million MT by

6 Fiscal Contribution Petroleum accounts for 30% of Kenya s annual imports (approx. Kshs 350B) Kshs 70B paid in taxes from petroleum products yearly + Doubtlessly Kshs 13.5B annually from VAT Petroleum products are at present exempt from VAT but there is a proposal that VAT can be utilized on petroleum products by August

7 Downstream Institutional Set up Ministry of Power and Petroleum Division of Petroleum Power Regulatory Commission Kenya Pipeline Company Nationwide Oil Corporation of Kenya Oil marketing corporations Licensing and other regulatory points Bulk storage and transportation Providing stability in provide and pricing through participation across the worth chain Over 60 registered oil advertising and marketing corporations in Kenya. The top 10 OMCs together with Nationwide Oil control roughly 77% of the market Mombasa refinery run by KPRL is currently shut Independents Resellers Consumers 7

8 The OTS Cycle OMCs submit month-to-month requirements per product which are then consolidated by the provision Coordinator Tender known as by the Ministry of Power each third or fourth week of the month Successful bidder mandated to supply product requirement for the month of the tender Imports arrive days after the date of the tender Petroleum Imports Circulation Schematic Discharge at KOT into KOSF KPC Eldoret Amenities Truck loading for North Rift and Environs and exports Imports Msa Nrb Pipeline KPC Kisumu Facilities KPC Nairobi Amenities Truck loading for Nyanza, Western and exports KPC Nakuru Facilities Truck loading for Central Rift and Environs Western Kenya Pipeline Nairobi OMC Facilities Truck loading for Nairobi and Environs 8

9 Are OMCs Actually a Cartel?…Local Pump Price Cost Build Up Price Merchandise PMS (Kshs/Lt) % of Total Price In the past (Kshs/Lt) % of TotalIK (Kshs/Lt) Value % of Complete Cost Cost of Product % % % Taxes (Obligation,RDL) % % % OMC’s gross wholesale margin % % % Transport, Bridging charge, Allowed pipeline/depot losses, KOSF Cost % % % Allowed retail dealer gross margin % % % Delivery fee % % % Total Kshs/Lt

10 Native vs Worldwide Price Movements 10

eleven Kenya Petroleum Infrastructure Challenges Inadequate and aged petroleum infrastructure offering maximum 10 days of operational stocks cover Lack of strategic petroleum stocks Petroleum infrastructure concentrated only on the southern part of the country resulting in massive trucking of merchandise Inadequate retail petrol station shops – solely 1,600 stations to serve a population of 44M Kenyans. This is approximately equal to, South Africa s Gauteng province alone with an space of 18,178KM2 and population of 10M. Courtesy of PFC Energy eleven

12 Low Per Capita Consumption..On account of LPG Infrastructure Challenges 200MT 70MT ninety seven% Actual Consumption p.a. Latent/ unrealised Demand p.a.

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