Kenya-Uganda oil pipeline to ease petroleum delivery

Oct 04, 2005 02:00 AM

by Joseph Olanyo

Plans to extend an oil pipeline from Eldoret, Kenya to Kampala, Uganda, are underway. I recently talked to the Managing Director Kenya Pipeline Company, Mr George Okungu, in Nairobi on the proposed pipeline.
Here are the excerpts:

Question: What is this Kenya-Uganda oil products pipeline all about?

Answer: The Landlocked countries of Uganda, Rwanda, Burundi and the Eastern Democratic Republic of Congo rely on Kenya and Tanzania for importation and transportation of white oil products. Currently, these countries have two main transportation options; either a combination of a pipeline from Mombasa to Kisumu through Eldoret and then by road and rail transportation to respective destinations.
The second option is by rail from Dar-es-Salaam through Mwanza to Port Bell in Uganda. To meet the increasing demand for the petroleum products, the governments of Kenya and Uganda intend to construct a pipeline extension from Eldoret to Kampala, with private sector participation.The main purpose of the project is to deliver refined petroleum products to Kampala more safely and efficiently.

Question: When did the project start?

Answer: The Kenya-Uganda oil pipeline extension project was conceived in 1995, when the governments of Kenya and Uganda signed a Memorandum of Understanding (MoU) on November 18, 1995 for a Feasibility Study of the Extension of the Mombasa-Eldoret Pipeline to Kampala. The MoU called for the establishment of the Joint Co-ordinating Commission (JCC), which was launched in May 1996.
Following receipt and acceptance of the feasibility report in 1999, the JCC mandate as per the 1995 MoU was seen to have been accomplished and in October 2000, the two governments signed another MoU for the extension of the Mombasa-Eldoret Oil Pipeline to Kampala. Two feasibility studies have since been carried out on the proposed extension and have found the project financially and economically viable.

Question: What are you doing to upgrade the infrastructure to deliver oil efficiently to neighbouring countries?

Answer: The pipeline extension is an international or cross border pipeline. Therefore, all institutional arrangements have to be put in place to ensure smooth implementation and eventual commercial operation of the network.
Implementation of the different stages of the project is in progress according to schedules and the pipeline is expected to be commissioned towards the end of 2007.

Question: How much are we talking about in terms of cost?

Answer: According to the 2001 prices, the basic capital cost (excluding financing cost) is estimated at $ 97 mm.

Question: What products shall be transported on this line?

Answer: Motor Spirit Premium (Super), Automotive Gas Oil (light Diesel), Dual Purpose Kerosene (Jet A-1 and Illuminating Kerosene).

Question: What does this mean to Kenya, Uganda and other countries in the region. What is the project rationale?

Answer: Beneficiaries shall be the countries of Uganda, Rwanda, Burundi, and northern DRC since fuel supply and distribution logistics will be enhanced. This is in addition to other strategic benefits such as: Provision of a cheap and efficient means of transporting petroleum products within the East and Central African region, enhancement of security of supply of products, especially to Uganda and beyond for the growing market, reduction of motor traffic on the Kenya-Uganda road, thus reducing road carnage, damage and associated road maintenance costs.
It will also facilitate the provision of an environmentally safe means of transporting petroleum products, increased revenue to the two countries (Kenya and Uganda) accruing from reduced dumping and smuggling of petroleum products.

Question: Eldoret to Kampala is a fairly long distance. What distance will the line cover and what is the expected capacity?

Answer: The proposed Kenya-Uganda oil pipeline extension will form an extension of the existing Mombasa-Eldoret pipeline for transportation of white oils from the existing Kenya Pipeline Company facilities at Eldoret, through Malaba on the border (110 km), Jinja (130 km from Malaba) and then to Kampala (a further 80 km). This gives the pipeline a total length of 320 km.
In terms of throughput (volume of products delivered), the capacity of the line will be about 1.2 mm cm in the initial year.

Question: How many firms pre-qualified for the project?

Answer: Twelve firms were pre-qualified and these include: Energem Petroleum, China Petroleum Pipeline Corporation, Tamoil East Africa, Petronet East Africa Consortium, ARB/Zakhem Consortium, Stone & Webster Management Consultants, Asia Petroleum, Petroleum India International, Stroitransgaz, MISA, East African Infrastructure Consortium and India Oil Corporation.

Question: What is the equity contribution?

Answer: The cabinets of the two respective governments of Kenya and Uganda approved the implementation of the project and agreed that the equity holding be as follows: The government of Kenya will contribute 24.5 %, the government of Uganda 24.5 % and the private investor will cater for the remaining 51 %.

Source: The Monitor
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