Uganda Finally Dumps Kenya for Tanzania in Oil Pipeline Deal

Fredrick Ngugi Apr 29, 2016 at 06:23am

April 29, 2016 at 06:23 am | Money Moves

Fredrick Ngugi

Fredrick Ngugi | Contributor

April 29, 2016 at 06:23 am | Money Moves

Presidents Uhuru Kenyatta Left, Yoweri Museveni Center and John Pombe Magufuli right. Photo (www.earthfinds.co.ug)

Uganda has finally announced its intention to partner with Tanzania in the much-awaited oil pipeline deal, a report published by AFP indicates.

Speaking to AFP on Saturday, Uganda’s foreign affairs minister Mr. Sam Kutesa said Uganda has entered a deal with neighboring Tanzania to export its crude oil via the Kabaale-Tanga route in preference to the earlier proposed route through Kenya.

“We have agreed that the oil pipeline route be developed from Uganda in Hoima to the Tanzanian port of Tanga,” the minister said.

According to Minister Kutesa, cost was the major factor that persuaded Uganda to revise its earlier decision to use Kenya’s northern corridor route to the port of Lamu.

“We considered Tanga oil pipeline route based on a number of aspects, among them it is the least cost,” the minister told AFP.

The decision was reached during the 13th Northern Corridor Integration Projects Summit held in Kampala, Uganda, on Saturday.

Returning from the summit on Saturday, President Uhuru Kenyatta announced that Kenya will soon be embarking on the construction of its own oil pipeline through the Lokichar-Lamu route while Uganda will construct its own pipeline through the Tanzanian route.

How Kenya Lost the Deal

A lot of speculations still abound following the news that the pipeline project was no longer viable.

Local reports indicate that the technocrats advised President Yoweri Museveni against the Kenyan route, citing additional cost, security and possible delay in construction of the oil pipeline due to protracted land compensation processes in Kenya.

According to Daily Nation, a final report of recent feasibility studies indicated that Ugandan technocrats from the Petroleum Directorate in the Ministry of Energy insisted that the Tanzanian route was the “least-cost option.”

The report further claims that the Kenyan route lost on all grounds of comparisons to the Tanzanian route, costing Kenya the $4 billion oil pipeline deal.

Experts also noted that the port of Tanga offers the best movement safety for oil tankers since it is well protected from the wind by several offshore islands as opposed to the port of Lamu, which experts claimed poses serious navigational hazards.

Ugandans were also concerned about the proximity of the Kenyan pipeline route to Somalia, arguing that this exposed the pipeline to attacks by Al-Shabaab militants.

Construction of the lucrative oil pipeline involves three major oil companies: Total of France, CNOOC of China, and Anglo-Irish Tullow oil firm, all of which preferred the Tanzanian route.

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