Firm among 5 eyeing LPG business, Mombasa Gas Terminal to face scrutiny over past history
One of the five privately owned companies that have applied licenses to construct a Liquefied Petroleum Gas (LPG) plant in Mombasa to tap into the submerged gas pipeline from the Kipevu Oil Terminal 2 (KOT2) is on the verge of a full blown due diligence scrutiny by the State Department of Petroleum under the Ministry of Petroleum and Mining over its past operations, The Informer Media Group has learnt.
Also, other line state departments and parastatals likely to be looped into the multi-pronged credibility authentication assessment of MGT, a subsidiary firm of Dubai based Milio International, an oil and gas global firm, include the Authority (NEMA) and the Energy and Petroleum Regulatory Authority (EPRA).
However, according to insiders privy with the goings on, the probe is yet to officially commence.
Some of the other companies that have already applied for the license to tap into the submerged gas pipeline from KOT2 include Aevitas Investment, Lions Gate Limited, Focus Container Freight Station, and Mansa East Africa Limited.
Focus Container Freight Station is the latest company to get the greenlight to construct a 15,000 metric tonne common-user LPG terminal.
Once licensed, they will serve the untapped LPG market, which is growing in the country and East Africa
In 2022, we exposed how the International Finance Corporation (IFC), the private-sector investment arm of the World Bank was entangled in alleged insider dealings with Milio International firm and its Kenyan subsidiary, Mombasa Gas Terminal (MGT) Limited over the latter’s stalled Sh2.5billion greenfield liquefied petroleum gas (LPG) terminal in the Port of Mombasa at Mbaraki Creek which has since stalled.
MGT was also accused of falsifying the National Management Environmental Authority (NEMA) assessment report on the project’s environmental impact.
At the center of claimed external influences controlling the global lender’s decisions on financing preferences is John Hart, the owner of Milio International and majority shareholder of MGT.
In June 2021, World Bank through IFC has approved a $23 (2.5billion) funding for the project by Mombasa Gas Terminal, a now stalled project.
As per a previous disclosure, IFC was looking to bring as much as $48 million as debt capital for the company, which had put a project cost of $112 million. It is not clear if IFC indeed went ahead with the transaction.
MGT’s project site is located at Mbaraki Creek within the Port of Mombasa, on a peninsula between the African Marine Dry Dock and the Mombasa Yacht Club.
The land for the import facility is on the site of African Marine and General Engineering Company Ltd.
The financing was meant to go towards the construction of the first phase of an LPG import and storage terminal.
In its disclosure, IFC says the $23 million project will be financed by an initial loan of $5 million (Sh53.9 million) and $10 million (Sh107.8 million) in additional debt arranged by IFC.
The balance of $8 million (Sh862.7million) is equity contribution from the sponsor with IFC.
Interestingly, three years prior to the commencement of the project, IFC had proposed to lend to the company.
“From the word go, there was no intention to see the project to fruition. The external influences on the decision to finance and readily availed budget runs deep akin to international economic hit men script. MGT project in Mombasa has since stalled.” Our source revealed.
Milio has been the main supplier of fuels to the NATO coalition forces in Afghanistan and participated in the development of oil terminals in the Caspian Sea and Black Sea.
In April last year, the Kenya Pipeline Company (KPC) and Kenya Ports Authority signed a Service Level Agreement (SLA) for the operations and maintenance of the Sh40billion new Kipevu Oil Terminal 2 (KOT 2).
The move aligns with a presidential directive for synergizing the two-state corporations to enhance efficiency in the evacuation of petroleum products.
According to the project design, the facility will primarily receive LPG from pressurised LPG ship berthed at new KOT-2 jetty using a pipeline being constructed from Common-User-Manifold (CUM) located next to KPC.
In petroleum industry parlance, a Common User Manifold (CUM) can connect importers to a single piece of infrastructure they can use to access their products from different ports. PIEA, which has been heavily involved in the change of design, is the umbrella body of all petroleum players.
