A US$ 15m lubricants factory is set to be constructed in Mombasa County, Kenya by KenolKobil in a joint venture with Castrol.
This initiative will be a cheaper option other than importing the lubricants from South Africa that the oil marketer has been relying on thus far.
KenolKobil’s Chief Executive, Mr. David Ohana confirmed the reports and said that the budget for the mega project has already been approved from the Castrol head office.
“We recently received notification that the head office of Castrol approved the budget for the project in Kenya,” Mr. Ohana said during the release of the firm’s half-year results last Thursday.
He however said that they still do not know when the development project will be launched though the go-ahead implies that they are now certain that they are going to blend in Mombasa with Castrol.
According to KenolKobi, the construction of the plant is projected to begin by mid-2017 and will cost the two partners approximately US$10 million or US$15 million for it to become a reality.
The factory is set to be a good initiative by the company as it is anticipated to have a monthly capacity of 1,000 tonnes of lubricants in what is placed to strengthen competition in the local petroleum sub-sector.
BP Southern Africa is the owner of the Castrol brand of lubes and it has an additional smaller lubricants plant in Kenya that produces a monthly capacity of 600 tonnes producing its own brands.
KenolKobil presently imports the Castrol lubricants from South Africa and attracts an import duty of 25 per cent. The oil seller is in quest of importing inputs that attract only 10 per cent duty for local blending, vital in cutting costs.
In May 2015, BP Southern Africa and KenolKobil signed an agreement which gave the latter exclusive distribution rights for Castrol products hence ending the scuffle that had seen BPattempt to repossess the brand from Kenol and award it to former partner Shell.
