Chinese Operator of Kenyan Railway Wins Bid for Oil Terminal

(Bloomberg) -- China Communications Construction Co., operator of Kenya’s new railway, won a bid to build an oil terminal that will have capacity to store 10 times more than an existing facility, according to the East African nation’s port authority.

Kenya and China signed infrastructure deals last week after bilateral talks between their leaders, President Uhuru Kenyatta said in a statement following an African heads-of-states summit in Beijing. The accords included the establishment of a special economic zone at Dongo Kundu in the port city of Mombasa, where the new terminal will be situated.

The Chinese company and the Kenya Port Authority have yet to sign a contract for the facility, which will be able to store 400,000 metric tons of petroleum products, acting Managing Director Daniel Manduku said Wednesday in an interview in Mombasa.

The existing Kipevu terminal -- which handles about 90 percent of oil imported into Kenya and petroleum products in transit to neighboring nations -- can manage only one cargo of 35,000 tons at a time, he said. The new terminal will replace the current site situated within the Mombasa port and will have the capacity to berth four 100,000 ton vessels simultaneously, according to the KPA.

Chinese Financing

An initial tender for the new terminal was canceled in 2016 to include a liquefied-petroleum gas line, according to the KPA. It was originally scheduled for completion by 2019 and will now be ready in the last quarter of 2020 after two years of construction, according to Manduku.

CCCC already operates the $3.8 billion railway linking Mombasa to the capital, Nairobi. China provided 90 percent of the financing for the 472-kilometer (293-mile) route commissioned in June 2017. It was built by China Road and Bridge Corp., a subsidiary of CCCC.

Chinese President Xi Jinping announced $60 billion of loans and other financing for the continent at the Forum on China-Africa Cooperation last week.

Port Projections

Mombasa, which serves at least five landlocked nations including Uganda and Rwanda, last year handled 1.19 million 20-foot equivalent units, or 30.4 million tons, and is expected to grow to 41.4 million tons in 2022, Manduku said. Trends point to the overall cargo handled in 2018 surpassing projections of 1.28 million TEUs, or 31.4 million tons, he said.

“Volumes are growing,” he said. “We are going by the fact that we have surpassed our half-year projections.”

©2018 Bloomberg L.P.