Tanzanian tycoon Rostam Aziz. FILE PHOTO | POOL

Kenya on Tuesday provided a Tanzanian billionaire the licence to arrange a cooking gasoline plant and storage amenities on the Mombasa port, averting a possible commerce spat between the 2 neighbouring nations.

The power regulator cleared Taifa Gasoline, which is owned by tycoon Rostam Aziz who had beforehand lamented that Kenya had gone quiet over his enquiries to construct a 30,000-tonne liquefied petroleum gasoline (LPG) dealing with facility within the nation.

The entry of the enterprise magnate, who was ranked the primary greenback billionaire in Tanzania by Forbes in 2013, alerts a vicious battle for management of the Kenyan cooking gasoline market that is still underneath the tight leash of Mombasa-based tycoon Mohamed Jaffer.

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“Sure, we have now already issued them with the licence to construct the plant,” Epra Director-Normal Daniel Kiptoo advised the Enterprise Every day on Wednesday.

The entry of Taifa Gasoline into Kenya is a part of a commerce deal agreed upon by Kenya’s former President Uhuru Kenyatta and Tanzania’s Samia Suluhu in 2021.

Mr Aziz had in 2021 complained that Nairobi went mute on his 2017 enquiry to construct an LPG plant, lamenting the limitations for Tanzanian entrepreneurs looking for a presence in Kenya.

Taifa Gasoline is the biggest LPG provide firm in Tanzania and has been feeding the Kenyan retail market through highway.

Now, Mr Aziz is looking for a big share of Kenya’s LPG market.

It additionally units the stage for a billionaires’ struggle pitting Mr Jaffer and Mr Aziz, 58, that’s first anticipated to chop the price of dealing with and evacuating cooking gasoline from the ships to the mainland, permitting sellers to switch the associated fee reliefs to customers.

Identical to Mr Jaffer, Mr Aziz has invested in constructing political networks that noticed him function MP and treasurer of the Tanzanian ruling get together — Chama Cha Mapinduzi (CCM).

Mr Aziz’s ambitions to determine a retail cooking gasoline presence in Kenya look set to set off one other market struggle with oil sellers like Vivo, Rubis and Whole, for management of the two.87 million households (23.9 % of Kenyan households) that use the gasoline for cooking.

Taifa Gasoline desires to construct the 30,000-tonne Kenya facility on the Particular Financial Zone in Dongo Kundu, close to the port of Mombasa. It was earlier estimated to value $130 million (Sh16.25 billion).

This will probably be proper at Mr Jaffer’s doorstep, together with his agency Africa Gasoline and Oil Ltd (AGOL) working a multi-billion shilling facility in the identical space.

Building of the Taifa Gasoline facility provides Kenya a chance to decrease cooking gasoline prices within the absence of value controls.

LPG costs have hit new highs, with the 13-kilogramme container retailing at a mean value of Sh3,266 in Nairobi whereas the six-kilogramme one has crossed Sh2,000.

It’s unclear what AGOL expenses oil corporations for dealing with cooking gasoline however the lack of different gamers within the enterprise suggests an absence of serious competitors that has saved the charges excessive.

AGOL has a storage capability of 25,000 tonnes of LPG following an improve final yr of the ability initially in-built 2013.

The plant was constructed to permit for bulk imports of cooking gasoline to decrease unit prices via economies of scale and curb shortages, which had been made tough by the smaller import terminal at Shimanzi.

It had a storage capability of 10,000 tonnes and the 25,000 tonnes unit is ranked among the many largest terminals in sub-Saharan Africa.

The import dealing with and storage unit has helped relieve demand pressures via the discount of stock-outs, successfully easing stress on LPG costs.

Beforehand, the oil entrepreneurs imported cooking gasoline individually in small portions attributable to insufficient discharge amenities.

This led to cooking gasoline shortages and costly LPG attributable to excessive import premiums and demurrage, that are penalties entrepreneurs pay delivery firms when tankers fail to dump within the stipulated time interval.

The Shimanzi terminal has a capability of simply 1,400 metric tonnes.

The tankers would queue for as much as two months, leaving the entrepreneurs with a day by day charge of $20,000 (Sh1.7 million).

The AGOL plant and Proto Power, the maker of Professional Gasoline, have provided Mr Jaffer a agency grip on the profitable cooking gasoline market.

Learn: Cooking gasoline consumption falls to four-year low

The enterprise mogul can be the proprietor of Grain Bulk Handlers, which has a close to monopoly within the discharge and dealing with of bulk grain cargo on the Port of Mombasa.

Non-public firms have been angling to profit from the rising use of cooking gasoline in Kenya within the absence of investments by the federal government through import and storage amenities.

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