NAIROBI (Reuters), May 20 - State-run National Oil Corporation of Kenya (NOCK) plans to invest up to 100 billion shillings to develop a strategic national petroleum reserve, the parastatal’s top official said on Friday.
The reserve will hold about 1 billion litres -- equivalent to 90 days consumption -- and help ease disruptions in the supply chain.
NOCK said in a newspaper advertisement on Friday that it had sought consultants for a detailed feasibility study on the development and implementation of reserves across the east African nation.
“We are going to do a feasibility on which areas these reserves should be and how much it will cost,” NOCK’s acting managing director, Summaya Athmani, told Reuters on the sidelines of an energy sector stakeholders forum.
“We are doing a master plan not only in Kenya, but also in the region. On the basis of that we will then look at how much will we need and then build the reserves,” she added.
Kenya, east Africa’s largest economy, has no strategic reserves and relies solely on oil marketers’ 21-day oil reserves required under industry regulations.
Athmani said that due to the heavy capital requirement needed to develop the reserves, the government was looking at partnering with the private sector and at building the storage facilities in phases.
NOCK was blamed for high fuel prices after it failed to deliver a consignment on time in March, increasing delivery costs after international oil prices rose.
Many Kenyans rely on kerosene for lighting and cooking as well as on diesel and gasoline for transport.
NOCK expected the feasibility would be concluded by mid 2012, and that construction could begin a year later, Athmani said.
NOCK controls 7.3 percent of Kenya’s oil market through its 70 petrol stations and has a 30 percent, or 25 million litres, monthly oil import quota.
The surging costs of fuel, bread and flour have driven up other costs like transport and electricity, and sent the inflation rate into double digits.
Kenya’s planning ministry on Tuesday slashed its economic growth forecast for 2011 to 3.5 - 4.5 percent, saying higher commodity prices were likely to slow expansion.
This forecast was at odds with Finance Minister Uhuru Kenyatta who saw growth at 6.1 percent.