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Kenya has leased 23.19 acres of state-owned refinery land in Mombasa to Asharami Synergy, a subsidiary of the Nigerian energy conglomerate Sahara Group, for 31 years, handing the company control of a project two parliamentary committees are investigating.
The government will earn about $174,000 (22.5 million shillings) a month in rent over the life of the lease, State Department for Petroleum Principal Secretary Kello Harsama told senators. He said the project has secured all necessary approvals, including a licence from the Energy and Petroleum Regulatory Authority, with construction due to begin in October and take about two years.
Asharami Synergy will build a 30,000-metric-tonne liquefied petroleum gas storage facility on the parcel in Changamwe, land belonging to Kenya Petroleum Refineries Limited. The project has been valued at about $137 million (17.7 billion shillings).
Sahara Group was founded in Lagos in 1996 by Tonye Cole, Tope Shonubi and Ade Odunsi, and has grown into one of Africa’s largest privately held energy companies, with operations spanning trading, power generation and downstream distribution across more than 40 countries. The Kenyan terminal marks a significant expansion of its downstream footprint in East Africa.
Why parliament is investigating
The award has drawn scrutiny because the project was originally being developed by a state corporation.
Kenya Pipeline Company had led the initiative as a public-sector project intended to expand clean cooking fuel access and lower household energy costs. It spent about $1.49 million (192.64 million shillings) of public money on a demand survey, an environmental and social impact assessment, front-end engineering designs and cost estimation before the Ministry of Energy and Petroleum transferred the project to the private company.
The Senate Standing Committee on Energy opened a formal inquiry, prompted by a petition from Busia Senator Okiya Omtatah, and the National Assembly’s energy committee launched a concurrent investigation. Lawmakers have questioned the bypassing of the state firm’s mandate, the transparency of the procurement, the legality of leasing public land, and how taxpayers recover the money already spent.
“Can the minister state reasons why the plan by KPC to develop the cooking gas handling facility in Mombasa was quashed and the project handed over to Asharami Synergy?” Omtatah asked, also pressing for details of all proposals received and the justification for the 31-year arrangement.
Energy Cabinet Secretary Opiyo Wandayi defended the decision, telling the Senate that the National Treasury advised private sector participation because of budget constraints and the need for efficient delivery, allowing the infrastructure to be built without adding to national debt. He said all necessary approvals for the land lease were obtained.
The transaction used an unusual legal route. Wandayi told the committee that Kenya Petroleum Refineries received Treasury authorisation to use the specially permitted procurement procedure under Section 114A of the Public Procurement and Asset Disposal Act. Ministry records show six companies were invited to bid, including TotalEnergies, Rubis Energy, Galana Energies, Gulf Energy and Vivo Energy alongside Asharami Synergy.
The sublease between the refinery company and Asharami was registered at the Mombasa Lands Office in July last year, while both parliamentary inquiries were under way.
The commercial case
The government’s argument rests on supply and price. Kenya’s LPG consumption stands at about 7.5 kilogrammes per person, and the state is targeting 15 kilogrammes by 2028 under its national growth strategy. Harsama projected the facility would lift national LPG uptake substantially within four years.
Harsama also told senators the government carries no commercial risk. “The project is a private venture with Asharami taking the full risk of the business hence no revenue sharing for the lease period,” he said, arguing the treasury benefits instead through the petroleum development levy as consumption rises.
Operating as a common user facility, the terminal is intended to allow bulk imports at a scale that reduces freight and landing costs at the Port of Mombasa, with savings expected to reach consumers in Nairobi, Kampala and Kigali given Mombasa’s position on the Northern Corridor. Kenya maintains value-added tax exemptions on LPG to encourage adoption.
The terminal also positions Mombasa against Dar es Salaam in a regional contest to become East Africa’s primary energy logistics hub, and puts Sahara Group in direct competition with established regional distributors.
Local residents in Changamwe have raised objections over land rights and what they describe as inadequate public participation by regulatory agencies.
Construction is scheduled to start in October. Whether the parliamentary committees produce findings before then, and whether those findings carry any consequence for a lease already registered, remains unresolved.
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