06-04-04 Stakeholders in Uganda’s oil industry are raising concern over the ability of Kenya Pipeline Corporation’s (KPC) proposed pipeline extension to meet the country’s needs. The Sh 120 bn pipeline will link KPC’s Eldoret depot with the Ugandan capital, Kampala.
But even as KPC finalises its implementation programme, the Ugandans have been quick to point out that the age and diameter of the pipeline, which runs from the Kenyan port of Mombasa to Eldoret, may not be up to the job.
"There is a problem of capacity with the Nairobi-Eldoret line. The Mombasa-Nairobi line has been in operation for the past 25 years, five years above the stipulated life span," says Ivan Kyayonka, the chairman of Shell Uganda. The Mombasa-Nairobi section of the pipeline was built in 1979 and has a 14-inch diameter, while the Nairobi-Eldoret, which was commissioned in 1994, has a 6-inch diameter.

The Ugandans now say an increase in the number of age-related breakdowns on the Mombasa-Nairobi stretch, and the low capacity of the Nairobi-Eldoret section is likely to cause massive supply problems in Uganda. The low capacity of the pipeline, the dealers say, could hinder industrial activity not only in landlocked Uganda but also in Kenya’s western hinterland.
Those murmuring from the Ugandan capital have been quick to finger the industrial boom in Tanzania’s northern copper belt where mining firms are said to be consuming more diesel than Uganda’s national consumption. Besides, as peace returns to Eastern DR Congo, the demand for oil products is expected to rise as mining activities pick up. In the estimation of Kampala’s oil men, KPC is unlikely to measure up to the task as long as it remains an arm of the Kenyan government.

The extension of the pipeline to Kampala will be a joint project of Kenya and Ugandan governments working in liaison with the private sector. Each of the two governments will have a 24.5 % shareholding in the project with the remaining 50 % going to private companies.
"Investors are now thinking twice before committing their funds to this project," Kyayonka said of the pipeline extension plan.
And in light of Kenya’s reluctance to privatise KPC, intense negotiations are said to be going on about joint management of the pipeline. And Uganda’s Ministry of Energy and Mineral Development are quietly grumbling about the weak position from which they are talking with their Kenyan counterparts.

Questions are being raised as to whether the Kenya government has any plans to upgrade the Nairobi to Eldoret stretch of the pipeline, and how it intends to address the age concerns on the Mombasa-Nairobi section.
No wonder in the last one-month Ochuodho has been speaking so eloquently about the company’s strategic plan, which to a large extent addresses the concerns coming out of Kampala. KPC has unveiled a 10-year strategy to consolidate the company’s corporate position in the regional market.

Major initiatives are in the offing to service the mineral rich Northern Tanzania and Southern Sudan, in order to ease the pressure on the Eldoret-Kampala pipeline. The programme involves a Sh 3 bn pipeline extension to the Nanyuki, Isebania, Voi, Namanga and Lokichogio with specific focus on the Southern Sudanese market.
The company has also finished constructing the Rift Valley-based Morendat station that has enabled it to increase its capacity by 38 %. The pump volume has consequently risen to between 220 and 230 litres per hour, up from 160 litres.

KPC is also investing Sh 723 mm in constructing additional jet tanks in Kisumu and Eldoret, while work on the Eldoret project is 75 % complete and is expected to be commissioned in August. The upshot of these developments is that it will be possible for the company to shut down some of its lines for maintenance without causing fuel shortage in the hinterland.
And according to Ochuodho, the strategic plan will enable PKC to meet rising demand for oil products in Western Kenya, Uganda, Rwanda, Burundi, Eastern DRC and Northern Tanzania.