Why northern Kenya oil pipeline route is a better option

The proposed Kenya-Uganda oil pipeline route. Source: Tullow

NAIROBI: Kenyans should join President Uhuru Kenyatta in hoping that Ugandan President Yoweri Museveni and President Paul Kagame of Rwanda will agree with him to route the regional crude oil pipeline from Kabaale, western Uganda, through Kainuk and Lokichar in Turkana County, Isiolo and Garissa counties to Lamu Port. Toyota Tusho, the contractor picked to carry out the project feasibility study, proposes that route.

Governors of the counties through which the pipeline is expected to pass would do well to be in the forefront persuading their people to give the national government all the ammunition it needs to persuade both its neighbours and the oil companies that the northern route is the better option.

Understandably, Britain’s Tullow Oil, with stakes in the Ugandan and Kenyan oil fields, is said to be pushing for the building of the southern —the Hoima-Nairobi-Mombasa—route because of security concerns in northern Kenya. The fact that each of the countries will be required to develop the route section under its jurisdiction means Kenya will contribute the biggest portion of the $4.7 billion (Sh462 billion) budget. This gives President Kenyatta a larger clout in his negotiations with the other presidents to not only adopt the northern route but also invite the private sector to take a leading role in its financing and operating reducing the burden on taxpayers.

Kenya could also sweeten the deal by undertaking to shoulder a larger part of the insurance costs required to mitigate against real and perceived security threats. Judiciously shared, these costs among local and foreign insurance and re-insurance companies, would be less than they might appear at first glance.

But the challenge remains how to bring the preliminary negotiations to a quick closure so that work can begin. The governors can push the project forward by encouraging their affected voters to accept President Kenyatta’s suggestion, made last year, that they convert their land ownership into shares in the proposed crude oil pipeline. This would mean they would earn dividends for generations to come as opposed to a one-time payment.

The routing of the proposed crude oil pipeline through northern Kenya would give development of the multi-trillion shilling Lapsset project the impetus it needs to move forward. It should not be lost on the local leadership that the Lapsset project was first conceived way back in 1975 but failed to take off as planned and the only reason there is renewed hope is because the last government included it in Kenya’s Vision 2030 blue print.

The frequent delays in the official launching of the Lapsset project by building the three berth, whose deal was signed with a Chinese Communications Company last August, is an indication of the challenges the entire project is facing. This means the proponents of the project need all the help they can get.

The benefits the northern Kenya residents—and indeed the entire country—is set to reap from development of the Lapsset project is beyond any current estimates and beyond economics.

Opening of markets

But, surprisingly, both the county governments and their national counterpart have yet to sensitise the local people on these benefits. Some of the benefits are pretty obvious—providing employment opportunities for the youth. The business communities would also benefit immensely from the supply of construction material that the contractors would be required, by law, to buy locally.

There is also compelling evidence that there are potential oil and mineral deposits in the northern region that have not been discovered yet. The building of roads and rails connecting Uganda, southern Sudan and Ethiopia through Lamu Port to the outside world would, at the very least, open the region to the rest of the country.

But even more exciting, there is even talk of building the road all the way through Bangui, in Central African Republic, to Cameroon and onward to Nigeria. The result would be the opening of a land route joining the Indian Ocean ports to those in the Atlantic coastline and the opening of markets in East and Central Africa to those in West Africa. And their trade would not have to pass through Southern Africa ports!

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