(Ecofin Agency) - Kenya has revealed plans to take possession of a suspended refinery in Mombasa and transform it into a storage plant, in order to improve the country's energy goals.

The refinery has been redundant since 2013, after plans for a $1.2-billion renovation were neglected on talks by consultants that it was not economically viable.

According to Energy and Petroleum Cabinet Secretary Charles Keter, Kenya will pay the $5-million it owed Essar Energy, who is the co-owner of the refinery, in order to make a start for the restoration of the plant.

“Converting the refinery into an oil storage facility ahead of commencement of production of the country’s first oil is a milestone for the country,” Keter said.

Oil companies present in the country, have said they can commence the production of a minimal quantity of crude that can be conveyed by trucks, in 2017, as complete commercial output will be determined by the construction of a pipeline, which is still under negotiations.

Essar Energy purchased a 50% stake in Kenya Petroleum Refineries Ltd in 2009 for the amount of $7-million from oil marketers which includes BP, Chevron and Royal Dutch Shell. The company had made arrangements to boost the refinery's crude handling capacity to 79 000 bpd by 2018, from the current 1.6-million now but the plan did not work out as oil marketers demanded for the refinery to be closed.

The Energy and Petroleum Cabinet Secretary stated that once Essar leaves, the refinery will be managed by Kenya Pipeline Company (KPC), Engineering news reports.

Anita Fatunji