The Senate has raised concerns over the handover of a Liquefied Petroleum Gas (LPG) project that was initially assigned to the Kenya Pipeline Company (KPC) but later transferred to Asharami Synergy Limited.

In a response letter dated May 21, 2025, Energy Cabinet Secretary Opiyo Wandayi addressed the Senate’s queries on the project, which included five key concerns surrounding the handover.

Among them was how the government intends to recover Ksh 192.64 million in taxpayers’ money already spent by KPC on studies, which included a demand survey, an environmental and social impact assessment, front-end engineering designs, and a cost estimation for the project.

Senate Probes LPG Project Handover from KPC to Private Firm

The following are the key questions raised, and the corresponding responses provided by the Ministry of Energy.

1. Why was KPC’s plan to develop the LPG facility in Mombasa dropped?

Wandayi explained that the LPG handling facility is part of the National LPG Growth Strategy, which aims to increase Kenya’s per capita LPG consumption from 7.5 kg to 15 kg by 2028.

Approved by the Cabinet in October 2023, the strategy includes initiatives such as the development of bulk LPG infrastructure, provision of LPG to public institutions of learning, and subsidised LPG cylinders for low-income households.

He said that the Cabinet explicitly allowed private sector involvement through lease arrangements, a method chosen to ensure timely implementation amid budgetary constraints. As a result, the project was not pursued through KPC but through a private investor.

2. Why was Asharami Synergy selected instead of allowing Kenya Pipeline to undertake the project?

The Ministry of Energy, in consultation with the National Treasury, opted for private sector participation after reviewing the financial implications of constructing bulk LPG storage and handling facilities in Mombasa.

According to Wandayi, this approach was recommended due to existing budget limitations and the need for efficient delivery.

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3. Was the leasing of 23.19 acres of public land to Asharami conducted in line with the law?

In response to concerns about the legality of leasing public land, the CS confirmed that all necessary approvals were obtained.

These included clearances from the KPRL Board, the National Land Commission, the Office of the Attorney General, the Head of Public Service, and the National Treasury.

A public notice was gazetted on April 8, 2025, in line with Treasury Circular No. 1/2025, which guides the leasing of public assets.

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4. What was the selection process, and why was Asharami Synergy awarded a 31-year lease?

Wandayi noted that the project was procured through a Specially Permitted Procurement Procedure (SPPP), as per Section 114A(2)(f) of the Public Procurement and Asset Disposal Act (PPADA), 2015 and Regulation 107 of the 2020 regulations.

Six companies were invited to bid: TotalEnergies Kenya, Rubis Energy, Galana Energies, Gulf Energy, Vivo Energy, and Asharami Synergy.

Only Gulf Energy and Asharami submitted proposals, and after evaluation, Asharami was declared the most responsive and awarded the contract.

5. How does the government plan to recover the Ksh 192.64 million already spent by KPC?

Responding to this concern, Wandayi stated that the existing agreements contain yield-up provisions, ensuring that the facility will eventually revert to the government through KPRL/KPC.

However, he acknowledged that KPRL, KPC, and Asharami Synergy are yet to meet and determine how the project data such as demand surveys, environmental and social assessments, and engineering designs will be shared or integrated into the project.

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