Uganda sets oil pipeline construction for April

Construction of the Eldoret-Kampala oil pipeline will start in April, the energy ministry's commissioner, Ben Twodo, has said. The work, which has been postponed several times, has hampered stable fuel supply to Uganda, a situation that has led to escalating fuel prices.
On July 18, 2006, Tamoil, a Libyan company, won a 20-year concession to build, own, operate and transfer the oil pipeline to the two governments. Construction of the 340 km pipeline was supposed to take 18-24 months at a cost of $ 71.2 mm. However, so far, it has not yet started.

To ensure a steady flow of petroleum products, Uganda and Kenya formed a Joint Coordination Committee to fast-track the oil pipeline. Harmonising bilateral and international agreements defining legal, commercial, financial, taxation, transportation and custom issues has delayed the project. Also, Uganda has to raise money to pay for the country's stake in the project and finalise resettlement and compensation of the people affected by the project.
Twodo said: "Money is not a big issue because it will be provided by the Government."

Tamoil has a 51 % stake in the project, while Uganda and Kenya are holding an equal share of the remaining 49 %.
"We are doing land acquisition. This involves evaluating individual and community property that will be affected by the project from Tororo to Kampala," he added.

The commissioner said the survey had been completed and submitted to the chief government valuer to make a final decision.
"When that is done, we expect to start compensating the people affected by the project and work will start in April," Twodo stressed. "The delay has been essentially the survey and valuation work, which is now complete. Every issue you have raised is in the final stages before we start the project."

Media reports from Kenya said critical agreements governing the project would be signed by the end of February. These include guarantees for completion on schedule, use and eventual transfer of the pipeline to the twogovernments and the formation of a joint venture company to run it.
A legal framework governing bilateral and international agreements is also on the way. The cost of transporting oil varies between $ 38-$ 42 per cm, an expense that is expected to decline significantly with completion of the project.