A Tanzanian billionaire’s plans to build a gas plant and storage facilities at the Mombasa port have been put on hold by Kenya, raising the possibility of a trade dispute between the two neighbors.
Rostam Aziz’s Taifa Gas submitted an application, but the Energy regulator rejected it due to environmental hazards posed by the 30,000-ton gas processing plant.
The business tycoon’s debut signaled the beginning of a fierce struggle for control of the Kenyan cooking gas industry, which is still tightly controlled by Mombasa-based businessman, Mohamed Jaffer. In 2013, Forbes listed the business tycoon as the first dollar billionaire in Tanzania.
Taifa Gas’s arrival into Kenya is a result of a commercial agreement between the two nations that was signed by Kenyan President Uhuru Kenyatta.
The regulatory license moratorium runs the risk of rekindling the trade dispute between Tanzania and Kenya, in which Dar es Salaam barred Kenyan products from entering its market.
The cooking gas handling and evacuation costs from the ships to the mainland were anticipated to decrease as a result of the billionaire match between Mr. Jaffer and Mr. Aziz, 57, allowing retailers to pass the cost savings on to customers.
Similar to Mr. Jaffer, Mr. Aziz has invested in establishing political networks, which allowed him to hold office as a lawmaker and treasurer for the ruling Chama Cha Mapinduzi party (CCM).
With Vivo, Rubis, and Total competing for control of the 2.87 million cooking gas cylinders in Kenya, Mr. Aziz’s plans to enter the retail cooking gas market appeared certain to spark another market battle.
“We did not clear their Environmental and Social Impact Assessment (ESIA) because of certain technical deficiencies. The EIA had some technical deficiencies which we want them to address before we consider their application further,” the Energy and Petroleum Regulatory Authority (Epra) told Business Daily.
The regulator withheld the details pertaining to Taifa Gas, the biggest gas marketer in Tanzania with over 30 LPG handling facilities.
The 30,000-ton Kenya facility would be constructed by Taifa Gas in the Special Economic Zone in Dongo Kundu, close to the Port of Mombasa.
It will be added to the small list of businesses that manage gas handling and storage at important entrance ports in Africa, joining Jaffer’s company, Africa Gas and Oil Ltd (AGOL).
25,000 tonnes of LPG may be stored by AGOL thanks to an improvement made to the facility’s 2013 construction last year.
In order to reduce unit costs through economies of scale and eliminate shortages, which had been occurring, the plant was developed to allow for bulk imports of cooking gas.
