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Uganda snubs Kenya, partners with Dar on oil pipeline deal

By Dominic Omondi
Updated Thu, March 3rd 2016 at 00:00 GMT +3
President Uhuru Kenyatta and his Ugandan counterpart Yoweri Museveni (left) during last year’s 11th Northern Corridor Integration Projects Summit, where a pipeline project deal was discussed. (PHOTO: FILE/STANDARD)

Kenya’s hopes of building an oil pipeline linking its coastal town of Lamu to Uganda’s oil fields have been dashed.

This is after Uganda and Tanzania yesterday announced that they had signed an agreement that will see the pipeline re-routed to Tanzania’s coast instead.

And in what appears to be a new twist in the never-ending drama among the three East African countries, Uganda now says the agreement was a way of Uganda ‘reciprocating’ Tanzania’s past favours to Uganda.

The latest development is likely to put the spanner in the works of the region’s largest infrastructure project, Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET). The success of the Sh2.5 trillion project has been hinged on the availability of, among other things, the Kenya-Uganda oil pipeline.

“The two countries are planning to build an oil pipeline between Tanga (in Tanzania) and Uganda covering a distance of 1,120 km,” the Ugandan presidency said in its statement confirming Kenya’s worst fears.

“Magufuli said this is projected to employ 15,000 people,” the statement, which was carried by news agency Reuters, said. But this is not the first time Uganda has indicated it had signed an agreement with Tanzania only to beat a retreat. In October 2015, the country said it had struck an agreement with Tanzania to explore the Tanga route.

In August, Uganda had intimated it would go with the Kenyan route citing cost-effectiveness. Museveni and President Uhuru Kenyatta had made a joint call to set up a pipeline via Kenya’s northern region ‘without further delay’.

France’s Total, an investor in Uganda, which was contracted by Uganda to conduct a feasibility study on the crude oil pipeline, raised new uncertainty about the Kenyan route, citing insecurity. The fact that Kenya’s pipeline would run close to war-torn Somalia has been a source of concern for some people in Uganda. Led by Total, these people fear that militants might launch an attack on the oil pipeline.

While Total was contracted by Uganda, Kenya contracted Toyota Tsusho. The two have the final word on the project.

But now it appears that security is not the only thorny issue. The fact that Uganda is said to have chosen the Tanzania route as “reciprocation” shows that politics is also a significant factor in the drama. Uganda’s Museveni has strong ties with Tanzania as he launched the rebellion that brought him to power in 1986 from Tanzanian soil.

There was no mention of the fate of Kenya’s pipeline in the statements issued after Ugandan President Yoweri Museveni and his Tanzanian counterpart John Magufuli met on Tuesday. Uganda, which has yet to start oil production, raised the possibility of a Tanzanian pipeline route last year. Kenya, which has also discovered oil, will be scratching its head on what to do next.

It is estimated that the pipeline project’s capital cost is $4,690,628,665 (Sh462 billion), while the annual operating expenditure will be about $131,490,122 (Sh12.95 billion). Energy Cabinet Secretary Charles Keter could not be reached for comment.

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