Nairobi - Kenya will sign a $350-million loan with six commercial banks on Wednesday to help finance a refined products pipeline between Mombasa and Nairobi, the Kenya Pipeline Company (KPC) has told local newspapers.
The state-run company awarded construction of the 450-km pipeline to Lebanon's Zakhem International which started work in July 2014.
The pipeline is separate from an oil pipeline that will take crude from newly discovered Kenyan and Ugandan oilfields to the coast. The route for the oil pipeline is under review.
“The $350 million loan will partly finance the construction of an ultramodern refined products pipeline from Mombasa to Nairobi,” Flora Okoth, KPC's acting managing director, said in a statement published in the Daily Nation and other newspapers.
Officials could not be reached for immediate comment.
KPC has said the existing pipeline linking the two cities, built by Zakhem International in 1973, has outlived its 30-year lifespan and was prone to ruptures.
The company said last year that the project would be financed through internally generated company funds and external borrowing would be limited to $400 million to $500 million.
Many of Kenya's refined fuel imports, as well as those in transit to neighbouring countries, have to be transported by truck, a slow and unreliable method that clogs roads.
The banks involved are CFC Stanbic Bank, Citibank Kenya , Commercial Bank of Africa, Co-operative Bank, Rand Merchant Bank and Standard Chartered Bank, the newspapers reported.
The 10-year loan is to have an interest rate of 5.38 percent above the London interbank offered rate (Libor), KPC said.
Zakhem International will also build a fibre optic cable along the route, install four pumping stations for the pipeline and upgrade existing KPC firefighting equipment in Nairobi.
KPC said last year construction was expected to take 18 months.
Reuters