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by Ismail Akwei, at 09:10 am, June 04, 2018, Money Moves

East African nations plan to export oil as citizens face sporadic fuel shortages

Kenya's president flags off trucks carrying crude oil

The only two oil-producing countries in East Africa, Kenya and Uganda, are nurturing their ambitions of exporting crude oil to boost their economies which are hit by sporadic fuel shortages and power outages.

Kenya’s president Uhuru Kenyatta flagged off four trucks carrying the country’s first oil resource from the Ngamia 8 oil fields in Turkana East to the coastal town of Mombasa where it will be kept as they look for an international market.

The feat was attended by chiefs and leaders of Turkana who couldn’t hide their joy of a future share in the proceeds of the expected 2,000 barrels of oil a day to be drilled by British company Tullow Oil since the oil finds in 2012.

The Ngamia 8 field has at least eight oil fields located in various sections of Turkana East and Turkana South and is estimated to hold 750 million barrels in total. The community has been promised 5% of the sales while the government takes 75% and the county takes 20%.

“We are all proud as Kenyans that this is possible because of the partnership between the government, our partners and the community here. The benefits from this oil will be shared and nobody will be left behind. Every member of this community will be on board,” said the Vice President William Ruto after the president had cautioned against disagreements on oil proceeds.

In the clamour for the proceeds, little was said about the fuel shortages that were sporadically hitting the fuel importing country, with the most recent being three days ago in Turkana.

The Kainuk bridge, which links Kenya with South Sudan, Uganda and Ethiopia, was swallowed by flood and fuel could not come into the county. It was rebuilt in a record two-days before the ceremony to cart away the first oil drilled in the area.

This is just one of the mild shortages that hit the nation. Last month, it was the same situation in Mandera where the only two fuel stations hiked their prices due to shortages.

In March, landlocked Uganda also decided to ship out its early crude oil exports through the Mombasa port. It drilled 45,211 barrels of test crude and is looking forward to exporting the resource. Its oilfields discovered in 2006 are estimated to hold reserves of 6.5 billion barrels.

Oil prices keep rising in Uganda due to fuel unavailability as fuel is transported from Mombasa through a pipeline to Eldoret and Kisumu from where it is supplied by road to Nairobi and Uganda. Any problem on the Kenyan side affects Uganda.

Kenya’s government announced plans in March to reopen its oil refinery in Mombasa in May to receive crude oil from Turkana County while Uganda has signed a contract in April for the construction of a $4 billion oil refinery.

Until the oil produced in the country directly fuel the needs of the people and economy which utilizes fuel for transportation and power generation when there is no electricity, Kenya and Uganda will be like Nigeria and Angola who produce the most oil in Africa, yet import equal amounts of fuel to serve their people.

Nigeria’s state oil firm, Nigerian National Petroleum Corporation (NNPC), said it had spent $5.8 billion on fuel imports since late 2017 to combat fuel shortage. Angola’s Sonangol also imported refined oil for the first time in its history this year.

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