Case: Hewatele’s medical liquid oxygen plant will revolutionise Kenya’s public healthcare

Funded by Finnfund and four other international investors’ USD 20 million investment, the first modern medical liquid oxygen plant is being built in East Africa. Hewatele’s CEO Zulfiqar Wali expects the company to expand rapidly in the neighbouring markets.

The availability of medical oxygen has been low in Kenyan hospitals, forcing the country to be dependent on imported oxygen.  Founded in 2013 in Kenya, Hewatele has saved human lives since the COVID-19 pandemic by increasing the production and availability of medical oxygen in Kenya.

In Kenya, medical oxygen is mainly available in the gaseous state. The problem with gaseous oxygen is the high price of gas cylinders and the low production capacity, which has resulted in a shortage of oxygen in hospitals.

The situation will improve significantly in 2025, when Hewatele’s new plant for medical liquid oxygen will start production in the economic and industrial area of Tatu City near Nairobi.

The construction of the new plant was made possible by Finnfund’s joint investment with DFC (the U.S. International Development Finance Corporation), SEDF (Soros Economic Development Fund), UBS Optimus Foundation and Grand Challenges Canada.

“The construction is progressing on schedule. I visited India and Turkey with our technical team to learn more about the plant’s construction process,” says Zulfiqar Wali, CEO of Hewatele.

According to Wali, Finnfund is a crucial partner to the company.

“Finnfund’s financing and expertise in African markets have been vital to us,” he says.

The plant is built by Nikkiso Cosmodyne. The American company operates in India, where it is approximately a million dollars cheaper to build the plant than in the United States.  There is no equivalent production plant in Africa at the moment.

“For quality reasons, we chose an American manufacturer that uses Japanese technology,” Wali explains.

The plant is being built on a turnkey basis and it will arrive in Kenya in parts. The first parts will arrive in December 2024 and the rest in the spring 2025.

“When the final parts have arrived and the plant is complete, we will launch full-scale production in June 2025,” Wali says.

An aim to save as many human lives as possible

The new medical liquid oxygen plant will produce 20 tonnes of medical liquid oxygen a day.

“Our priority is to improve the availability of oxygen, so that hospitals are no longer forced to move patients to other hospitals where oxygen is readily available. The new plant will increase the availability of medical liquid oxygen substantially and simultaneously reduce costs,” Wali says.

The production costs of gaseous oxygen are five times greater than those of liquid oxygen. According to Wali, the current cost of oxygen is KES 230–250 per litre.

“When the new plant is operating at full capacity, we will be able to sell oxygen at a rate of KES 150–170, which is half of the current market rate, while also staying profitable,” Wali says.

The new plant will produce liquid oxygen, which will be delivered from the plant’s storage tank to hospitals’ tanks by using a special refrigeration and pipe system directly to the patients’ bedside.

The new plant is the first modern liquid oxygen production plant in East Africa. The existing plants are old with outdated technology, and their production capacity is low.

Hewatele’s CEO Wali and his team are fully committed to improving the availability of medical oxygen alongside the company’s core business. During the COVID-19 pandemic, Wali and his team worked overtime to provide as many as possible with medical oxygen when the demand exploded due to the high number of COVID-19 patients.

“We even helped those customers who we knew to be slow to pay or have financial difficulties, especially public service providers. The most important thing was to save human lives,” Wali says.

Hewatele’s most recent friendly gesture to public healthcare and patients has been breathing packages, which the company sells for an affordable price.

“Even if a hospital can afford a cylinder of gaseous oxygen, it is of no use if the hospital does not have the tools to pass the oxygen to the patients. We want to offer oxygen mask sets at a price hospitals can afford,” Wali says.

Opportunities in neighbouring countries and industry

Hewatele is already planning on expanding its business in Kenya’s neighbouring countries. When operating at full capacity, the new production plant is expected to fully meet Kenya’s demand for medical oxygen.
Currently, Hewatele has five gaseous oxygen production units in Kenya and one in Uganda.

“For now, we will keep some of the old plants as reserve units. In remote regions, where the demand is low, we will continue to provide gaseous oxygen,” Wali says.

The useful life of gaseous oxygen plants is around 10–12 years. Some of Hewatele’s plants are nearing the end of their useful life, but the newer plants will be producing gaseous oxygen for years to come.

“With small additional investments, we can make a gaseous oxygen plant produce different types of gases and gas mixtures for the industry’s needs,” Wali explains.

According to Wali, the greatest opportunities for expanding the business lie outside Kenya, especially in Uganda and Tanzania as well as in Ethiopia, where liquid oxygen is not readily available. 

“The population of Ethiopia is 120 million, and the energy costs are one fourth of the cost level in Kenya. Our key challenges are exchange restrictions and the civil war. On the other hand, the war increases the need for medical oxygen. I see Ethiopia as a really interesting opportunity for expansion,” Wali says.

Wali points out that the costs of production scalability are significantly lower than the start-up costs of the new production plant.

“I am certain that our investors are eager to launch a new financing round to speed up our company’s growth. We are planning on increasing the capacity in two years,” Wali says.