Rwanda activates Kenya fuel-import framework with first 40,000-tonne Mombasa cargo

Rwanda has put its June fuel-import framework with Kenya into operation after a 40,000-tonne shipment of petrol and diesel arrived at the Port of Mombasa.

The MT Sea Wolf, carrying the shipment for state-owned Rwanda National Energy Company (RNEC), docked at Kenya Pipeline Company’s (NSE:KPC) Kipevu Oil Terminal 2 on September 29. It was the first cargo handled under the Kenya arrangements, following an earlier RNEC shipment through Tanzania’s Port of Tanga in July.

The Kenya package comprises three agreements: an umbrella memorandum of understanding signed on June 29 between Rwanda’s Ministry of Trade and Industry and Kenya’s Ministry of Energy and Petroleum, a tripartite implementation agreement involving the two governments and RNEC, and a separate transport and storage agreement between RNEC and KPC.

Under the structure, RNEC sources the fuel independently, while KPC handles the Kenyan pipeline and storage leg before onward transport to Rwanda.

Rwanda’s Minister of State for Infrastructure Armand Zingiro said the arrangement would provide a “reliable and cost-effective way” to import refined petroleum products while strengthening security of supply.

The Mombasa shipment is equivalent to nearly one month’s fuel consumption in Rwanda, according to Kenyan Energy and Petroleum Cabinet Secretary James Opiyo Wandayi.

Wandayi said Rwanda-bound petroleum volumes handled through Kenya’s Northern Corridor were expected to rise more than tenfold, from roughly 50,000 cubic metres a year to more than 500,000 cubic metres annually.

Rwanda imports all of its petroleum products and is expanding domestic storage as it builds strategic reserves. More flexible storage terms in Kenya provide additional room to manage the timing of onward deliveries while Rwanda expands its own capacity.

KT Press reported that KPC extended the permitted storage period for Rwanda-bound products from 35 days to as much as 90 days for an initial two-year period. KPC operates a 1,342-kilometre pipeline system and says its storage capacity exceeds 1bn litres.

RNEC signed a separate agreement with Gulf Bulk Petroleum Tanzania on July 3 covering the import and storage of bulk refined petroleum products through the Port of Tanga. That route became operational later in July, ahead of the Kenya route.

RNEC is responsible for the commercial management of Rwanda’s petroleum imports and can source cargoes directly while using regional partners for transport and storage.

For Kenya, the arrangement offers an opportunity to increase Rwanda-bound petroleum traffic through Mombasa. KPC, which listed on the Nairobi Securities Exchange in March, operates the country’s main petroleum pipeline network.

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For Rwanda, the commercial advantage is greater flexibility over procurement, storage and delivery as costs and operating conditions shift. For Kenya, higher Rwanda-bound transit volumes would increase utilisation of KPC’s pipeline and storage network.