Kenya slashes oil pipeline tariffs by half

Kenya has slashed oil pipeline tariffs by 50% as it seeks to win back oil importers from landlocked countries to its network. This is after it lost the regional fuel transport market to Tanzania’s port of Dar es Salaam.

The tariffs scheduled to be gazetted by the Energy and Petroleum Regulatory Authority set the rate at US $30.89 per 1,000 litres from the previous US $60 for the same volume. The three year revision will see the rates fall further fall marginally to US $30.65 in 2020 and to US $29.07 in 2021.

Competition for business

The tariff revision is said to be highly motivated by a decision by Tanzania to form a task force operating a One Stop Centre at the Dar es Salaam port to improve efficiency. According to the Works, Communications and Transport Minister Isaack Kamwelwe, the team will bring together at least 20 stakeholder organisations from key institutions, both public and private, involved in cargo clearance at the port.

These include the Tanzania Port Authority, the Tanzania Revenue Authority, Tanzania Food and Drugs Authority, Tanzania Bureau of Standards, Tanzania International Container Terminal Services, Tanzania Freight Forwarders Association, Tanzania Truck Owners Association and the Dar es Salaam Corridor Group.

Kenya’s Northern Corridor has long been the preferred route by landlocked countries but recently, the Central Corridor through Tanzania has gained favour especially with importers in DRC and Rwanda. Therefore, the revision is as a result of fierce competition for business between the two ports as each country seeks to attract traffic to its transport corridor.

In June, Finance Minister Philip Mpango in his budget speech announced the scrapping of delivery fees, stripping fees, export fees, and container cleaning charges at the Dar es Salaam port. The country also outlined plans to have Malawi, the DRC and South Sudan increase their import and export cargo volumes through Dar es Salaam. South Sudan signed a bilateral agreement to at least double its annual transit cargo volume.