Mombasa, Kenya: Close to 300 employees of the Kenya Petroleum Refinery Limited (KPRL) face an uncertain future after the Government decided to cut its losses, quit the refining business and transform the facility into a receipt terminal.
As a storage facility for imported petroleum products, KPRL would require a thin staff and most of those employed by the facility are likely to be sent home.
The Ministry of Energy said it would soon embark on the modalities of retrenching employees, sorting out debts owed to financiers and converting the facilities at KPRL to store refined petroleum products.
However, Indian giant Essar Energy, a 50:50 owner of KPRL with the Government, insisted that it is premature to talk about closure of the facility and sending employees home as there are still options available.
Essar says it is confident that the Changamwe-based refinery can be turned around if the $1 billion (Sh85.3 billion) modernisation plan is implemented.
But there has been increased pessimism across the board about the viability of the refinery. It has been written off by oil marketing companies as well as the Energy Regulatory Commission as being obsolete and costing the economy billions of shillings every year.
KPRL Chief Executive Brij Bansal said a shareholders meeting would be held in the course of this month to discuss the prospects of the refinery before a final decision is made.
The refinery performed dismally last year, with its uptake of crude oil declining by about 50 per cent to 992,000 tonnes from 1.6 million tonnes in 2011.
Bansal attributed this to a failure by oil marketers to buy refined petroleum products from the facility.
“The oil marketing companies have not been lifting our products, despite a legally binding agreement being in place. The Government has also not made attempts to reinforce this agreement.”
He added that marketers have overstated the amount lost due to inefficiencies at the refinery, saying that it translates to between Sh2.50 and Sh3 per litre, not the Sh10 they are claiming.
By Macharia Kamau, The Standard
