Clearly extensive dialogue will have gone into the construction of the Uganda based pipeline deal before the completion of the actual project. Uganda, Kenya and Tanzania government officials are currently in the final stages of drafting a report on the $4 billion (Shs405 billion) crude oil pipeline route despite Tanzania being Uganda’s choice.
The report that will be presented to the heads of state and adopted at the 13th Northern Corridor Integration Projects summit will be presented this weekend with a final position. It consists details of the three potential routes; the Tanga in Tanzania, backed by a Gulf Interstate Engineering study and the southern and northern Kenya routes, supported by the Toyota Tsusho feasibility study.
Energy and Petroleum Principal Secretary Andrew Kamau said the outcome of the discussion will be presented at the Northern Corridor Integration Projects (NCIP) summit in Kampala in a fortnight.
Kenya, Uganda, Rwanda, South Sudan and Ethiopia presidents are following the discussions because the pipeline is considered a key resource within the Northern Corridor projects. The northern Kenya route starts from Hoima and goes through Lokichar to Lamu.
Uganda Energy minister Irene Muloni said on phone that their main interest is “a least cost route considering tariffs, terrain, infrastructure and viability of the port of transportation.”
Ugandan officials said Tanzania had waived land fees, transit charges and taxes on the pipeline, but critics argue that such a deal is not economically-viable.
The Kenyan government, however, will charge Uganda $12.6 (Shs42, 200) per barrel of oil transported through the Hoima-Lokichar-Lamu route.
If the pipeline were to pass through northern Kenya, it will be owned by the two governments while Total which owns a majority stake in Uganda oil fields, Tullow Oil and China Offshore National Oil Corporation are remain the major oil firm stakeholders seriously interested in investing in this project.
“KPC [Kenya Pipeline Corporation] will come in at the very last stage to manage the crude oil pipeline,” said John Ngumi, KPC’s chairman.
“Kenya prefers the northern route through Lamu, for its added advantage presented by the Lamu Port South Sudan Ethiopia Transport (Lapsset) corridor,’’ he said.
Mr Ngumi said that oil-dependent South Sudan could also opt for the Kenyan route, adding: “It will make sense to extend it to serve Ethiopia which lacks a crude oil pipeline.
“This will boost the country’s share of wealth, Juba pays Khartoum $25 (Shs83, 500) per barrel in transit fees and
In October 2015, Uganda’s Energy ministry signed the agreement with Tanzania Petroleum Development Corporation and Total E&P Uganda. The October deal proposes a feasibility study that would give way to the construction of a crude oil export pipeline via northern Tanzania to the Indian Ocean port of Tanga. The move sparked fresh talks between Kenya and Uganda even after Toyota Tsusho set the pipeline completion date at 2020.
Analysts say that the Kenyan route comes with more economic benefits in the long-run while Total argues that the Kenyan route poses security threats that could adversely affect the construction of the pipeline.