Uganda hands Kenya tough deadlines on oil pipeline

Workers on a Kenya Pipeline Company extension project. A row over a tender for the planned construction of a Sh53 billion Mombasa-Nairobi oil pipeline has deepened with the Parliamentary Committee on Energy summoning MD Mr Charles Tanui over the issue. PHOTO/FILE

Workers on a Kenya Pipeline Company extension project. Uganda is playing tough on the crude oil pipeline, with fresh demands that Kenya must first meet its pre-conditions before construction begins. PHOTO/FILE

By LILIAN OCHIENG

Uganda is making fresh demands that Kenya must first meet its pre-conditions before construction begins on the crude oil pipeline.

Kenya, Uganda, Rwanda, and South Sudan last week met to understand the directive by Uganda’s President Yoweri Museveni and President Uhuru Kenyatta on the pipeline route.

The two presidents agreed that subject to financing, security guarantees, transit fee/tariffs and no further delay by Kenya, Hoima-Lokichar-Lamu oil pipeline starts as soon as possible.

“There was a slight misunderstanding with Kenya thinking that the agreements would be met as the project went on, Uganda however demanded that the conditions be met upfront,” said Mr Joseph Nyaga who is in charge of the Northern Corridor Integration Project Authority in Kenya.

As the announcement was made in Uganda last month, Uganda’s Energy minister Irene Muloni noted that Kenya contested some of the conditions set by Uganda on the project.

“It is not like it was a misunderstanding but rather they were uncomfortable with some of the terms. The issue of financing was premature before we agree on the structure of the project in terms of ownership,” Ms Muloni said.

COST EFFECTIVE ROUTE

It has now emerged that Total, contracted by Uganda to conduct a feasibility study on the crude oil pipeline and Toyota Tsusho, contracted by Kenya have the final word on the project.

Toyota Tsusho’s design carried the light of the day after the two governments demanded a cost effective route for the oil pipeline.

Total had suggested the Southern route – Hoima-Eldoret-Lamu/Mombasa route arguing that would increase the value of Uganda’s resources.

However the design by Total is advocated by International Oil Companies-UK’s Tullow Oil PLC, France’s Total E&P and China’s Cnooc who currently operate in Uganda.

The multinationals have quoted security concerns in Kenya as the main reason why the Southern route is better.

Kenya and Uganda have now settled on setting up a company owned by investors involved, Uganda, Kenya and other involved parties. This Mr Nyaga said, will help ensure tariff demands by Uganda are met.

Kenya is also taking Ugandan officials on a tour, through The Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor, to show them how the corridor is growing economically by the day.

“We have agreed security people should be brought on board so that as we speak as energy people we will bring experts in security and finance to help address conditions set by Uganda,” said Mr Nyaga.

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