No deal on pipeline yet as presidents Uhuru Kenyatta and Yoweri Museveni meet

President Uhuru Kenyatta receiving President Yoweri Kaguta Museveni on his arrival at State House Nairobi.

NAIROBI: Kenya will have to wait for at least two weeks to know if the Sh400 billion crude oil pipeline will pass through the country or not.

This follows yesterday’s meeting between President Uhuru Kenyatta and his Ugandan counterpart Yoweri Museveni that deferred a deal on the issue pending recommendations from a technical team that will advise further. In a joint communique signed by both Kenya’s Energy Cabinet Secretary Charles Keter and his Ugandan counterpart Irene Muloni, the two heads of states have scheduled another meeting, where a final decision will be communicated.

President Kenyatta will travel to Kampala in two weeks to hold a similar meeting with Museveni. “The two leaders agreed to meet after two weeks in Kampala to allow their technical officials to harmonise their presentations,” read the statement in part.

This latest development comes even after it emerged that Tanzanian and Ugandan authorities on Thursday last week signed a new pact in which Total SA, which has a stake in Uganda’s crude oil discoveries, had pledged a Sh406 billion pipeline that would pass through Tanga and whose construction is expected to begin as soon as possible.

It is not clear how this will be affected by yesterday’s joint communique by presidents Kenyatta and Museveni, as reports in Tanzanian media indicated that the project was scheduled to start in August.

 VIABLE OPTION

Yesterday, the two heads of states heard technical presentations by energy officials from both Kenya and Uganda.
The presentations focused on options of constructing the pipeline from Hoima in Lake Albert, with one option through a northern Kenya route and onto the oil fields of Lokichar, and another through a southern route through Nakuru with a loop to Lokichar.

Another option was to have the pipeline from Hoima pass through Tanga in Tanzania.
Already, presidential spokesman Manoah Esipisu has said Kenya favours the northern route as it was part of the Lamu Port, South Sudan, Ethiopia transport corridor project, a route expected to spur growth in the region. But the communique also lists Tanga as an option that should be considered, apart from Lamu and Mombasa.

This may signal a softened stand with Kenya acknowledging the Tanzanian route as a viable option. It also points to Tanzania being considered as an important player in the pipeline deal.

This is despite a hardened stance by a section of Ugandan and Kenyan officials who had dismissed the Uganda-Tanga route on grounds that Tanzania was not a member of the Northern Corridor Integration Projects summit.

The next round of talks point to the possibility that the earlier memorandum of understanding that had been struck between presidents Kenyatta and Museveni can no longer hold.

Last week, the deal appeared to be up in smoke after it emerged that the Ugandan government may have picked the Tanga route at Kenya’s expense.
Tanzania, through its presidential press unit, said President John Pombe Magufuli had met Museveni on the sidelines of the 17th Ordinary East African Community Summit and agreed that the pipeline would pass through Tanga.

COMPENSATION COSTS

In Kampala, technical officials are to harmonise their presentations on four contentious issues, including the cost of the pipeline, security and completion time.
The officials will be banking on the possibility of the pipeline passing through either Kenya or Tanzania based on the cheapest option that will deliver a “regional integrated model.”

The route through Kenya is approximately 1,120km with a price tag of Sh457 billion. If the Total offer of Sh406 billion is anything to rely on, Kenya may rank lower than Tanzania in terms of cost given that the costs will be split between Kampala and Nairobi.
The Tanzanian route is also expected to pass through a low-populated area, thus lowering compensation costs cited as a problem in Kenya.

The technical team will also look at issues along the three alternative routes in question. It will assess existing and planned infrastructure, terrain and elevations along the routes being touted.

Security on any of the routes to be chosen will also have to be assessed. Kenya had contested some preconditions including guaranteeing security, especially at the project stop point, Lamu, which borders insecure Somalia to the north.

Ahead of yesterday’s meeting, the Tanzania and Uganda deal-or-no-deal intrigues continued to deepen.
Some leading Kampala dailies reported that Javier Rielo, the Total East Africa vice president, had even assured Magufuli that funds were available and the company would begin construction of the pipeline as soon as possible.

It all began with Uganda settling on Kenya with the backing of UK’s Tullow Oil Plc and China’s CNOOC, which hold interests in Kenya’s oil fields.

But this took a twist when Total used its strong financial muscle to conduct a feasibility study that favoured the southern route.

Already, Tanzania is planning on how to reap from the deal. It is estimated that about 15,000 people, mostly Tanzanians, will be employed by the project.