Kenya, Uganda seek private investment partner for oil pipeline

Kenya and Uganda said on Monday they were looking for a strategic private investment partner to build and operate a pipeline to transport refined petroleum products between the two east African countries.

The new pipeline, estimated to cost $300 million, is expected to join an existing pipeline from Eldoret, western Kenya, and ferry oil to Uganda's capital Kampala, a distance of about 352 km (220 miles).

"The pipeline will interconnect with the existing 14-inch diameter pipeline running from Nairobi to Eldoret and should be able to transport products to and from Kampala, Uganda and Eldoret, Kenya including spur line in Jinja," the two governments said in a joint call for bids published in Kenyan newspapers.

"The project will also include a common user depot at the pipeline terminal in Kampala," they said, adding that it would be developed under 20-year Build-Own-Operate-Transfer arrangement.

Landlocked Uganda currently transports all of its fuel - imported primarily through Kenya's Mombasa seaport - in tankers over several hundred kilometres of road. Officials say the method is unreliable, costly and damages roads.

The contract to build the pipeline from western Kenya to Uganda was originally awarded in 2007 to the east African unit of Libyan-owned petroleum firm Tamoil. The contract was cancelled in September last year after the project faced multiple delays.

Both Kenya and Uganda have discovered oil reserves but production has yet to start.

- Reuters