Govt Terminates 320Km Kenya-Uganda Oil Pipeline

3568 Views Kampala, Uganda

In short
The government of Uganda has terminated a multi-million project to construct a 320-kilometre-long oil pipeline between Eldoret in Kenya and Kampala in Uganda.

The government of Uganda has terminated a multi-million project to construct a 320 kilometre long oil pipeline between Eldoret in Kenya and Kampala in Uganda.
Rev Justaf Frank Tukwasibwe, the Commissioner for Petroleum Supply has said that government has duly terminated the engagement with Tamoil East Africa Ltd – TEAL, the Libyan company that was awarded the contract to build the pipeline, an extension of the Kenya oil pipeline from Eldoret fuel depot to Kampala.
In 2006, TEAL won the bid to finance and construct an 8 inch pipeline at a cost of 78.2 million US dollars. However, the agreement between the two governments and TEAL was not signed until January 2007 to enable the investor to start the development phase of the project.
 Five other firms also submitted bids for the contract but lost to TEAL. They include Shell Uganda Limited, China Petroleum Pipeline Engineering Corporation, Zakhem Construction Limited, Petronet East Africa Consortium and Energem Petroleum Corporation Ltd.
An appeal by the Petronet East Africa Consortium to the Public Procurement and Disposal of Public Assets Authority for a review failed after it emerged the authority did not have jurisdiction over such a project involving two countries.
It’s not clear what has transpired since the time of signing the contract to date but Tukwasibwe said without much explanation that the entire project was being repackaged for a new investor that would be selected to undertake the work.
Tukwasibwe said there were plans to conduct the exercise jointly at the level of the East African Community and no longer as a venture between only Uganda and Kenya. He said they were also considering developing plans for an extended oil pipeline to Rwanda.
//Cue in: “We duly terminated…
Cue out: …former project developer.”//
Tukwasibwe said that government would continue with the promotion of the Kenya-Uganda and Uganda-Rwanda Oil Pipelines as the repackaging progresses.
He observed that adequate importation, storage, transportation and distribution infrastructure to cope with rising petroleum demand were some of the critical challenges the country is facing in the petroleum supply chain.
Currently, both Kenya and Uganda import crude oil and finished oil products from the Gulf region through the Indian Ocean to Mombasa Port from where the crude oil is refined at a Kenya-owned refinery. The pipeline project is expected to benefit Uganda, a land locked country, which relies largely on Kenya for its oil import.
Uganda relies majorly on road transportation, using oil tankers, for its oil imports through Kenya, a means that suffers from delays occasioned by customs clearance among other issues.