Image: PCS
Kenyan President Willian Ruto held a meeting with his Ugandan counterpart Yoweri Museveni last week.
The February 26 meeting at Mr. Museveni’s ranch at Kisozi, was convened primarily to discuss how to resolve the petroleum imports impasse that had almost caused a cold war between two longtime East African trading partners.
In the meeting , the two leaders agreed to swiftly restore relations by President Ruto ensuring that Uganda is issued with the permit to import her petroleum products using Kenya’s petroleum products infrastructure facilities through its National Oil Company (UNOC) without strenuous preconditions.
After the meeting, president William Ruto posted on his social media platforms that in addition to agreeing to solve issues related to oil imports, the two leaders resolved to revive plans of constructing the petroleum pipeline from Eldoret to Kampala that has stalled since 2006.
However, sources at the Ministry of Energy of Uganda, say the stalled Eldoret-Kampala pipeline project is nolonger economically viable and technically appropriate.
One of the reasons advanced for the difficulty of implementing the project for example, are speculators, who rushed to acquire land in the Eldoret-Kampala pipeline corridor areas that have since made compensation prospects unmanageable.
“At the moment, part of the proposed corridor for that Eldoret-Kampala pipeline has on it hotels, arcades, petrol stations, factories name it .. so the cost of compasation alone along that route would be much higher than the actual cost of constructing the pipeline,” an official said, adding;
“Expensive pipeline construction costs automatically lead to increased pump prices as costs are pushed to the last consumer because the investors will want to recoup their investment. This, therefore, creates a situation where a cure may be more dangerous than the disease itself. I doubt if the two leaders would want that,” the official said.
The officials say trying to come up with alternative routes to sort the problem of land compensation speculators doesn’t present any better way out.
“It takes a long time because consultants have to come up with the most appropriate route for pipeline as they must put into consideration the social , environmental, and economic aspects,” the official from Ministry of Energy said.
The official however asserts that Kampala- Tanga petroleum pipeline route is more viable because of the existing 1443 kms of route corridor from Hoima in Western Uganda to Tanga port in Tanzania that has already been secured under East African crude oil Pipeline project(EACOP). Accordingly, it means that unlike the Kenyan route, there will be no need for more compensation as the acquired land in the corridor is enough to accommodate 3 pipelines that includes crude and refined petroleum products and natural gas hence making the project cost effective.
Officials assert that “since the designs and environmental studies for the crude pipeline on that route are complete, it makes it quick and easy to modify the designs and updates of environment studies in order to conform to refined product pipeline construction requirements if the government decides to retain the same consultants thereby cutting the time of studies and compasation from five years the government would have spent if it was to be done via the Kenyan route to less than 12 months on the Tanzanian route.
“The Uganda- Tanzania crude pipeline project has already procured the civil works contractor to undertake the construction of the pipeline and so if the same company is contracted to do the work, the construction costs will be significantly reduced since the company will have mobilized equipment, materials and established other infrastructure to support the crude pipeline construction,” the official argues.
Some of the Ugandan based companies have reportedly already expressed skepticism about Kenya’s decision to finally accept to issue a license to the Uganda National Oil Company (UNOC) saying that if it’s not being done on good will , there is a likelihood that they may publicly give the license but covertly go a head to frustrate the Uganda’s oil importation through other means like deliberately delaying the ships carrying the UNOC products from docking and offloading on time or increase the storage and pipeline fees for products destined for Uganda.
“ Kenya in recent times without prior warning has imposed non tariff barriers on products from Uganda like Sugar, eggs, milk and maize a factor that has made Uganda’s farmers and business people suffer huge losses a thing Uganda has never done. Uganda shouldn’t be quick to celebrate Kenya’s decision. once bitten, twice shy” he said .
During end of 2023 year speech, President Museveni castigated East African leaders who impose non -tariff barriers on products from neigbouring countries saying that in his life as the President of Uganda, he has never closed any border with any of his neighbors as well as posing trade barriers “because they end up hurting the normal people.”
“Some business people in Uganda tell me to also retaliate every time a certain country imposes trade restrictions, but I say no. If other leaders are doing it, that’s their mistake, I’ll not be part be part of the people that hurt African people,” he said in his end of year speech.
When Kenya blocked Uganda from using her territory to import petroleum products, Uganda rushed to East African court to seek redress and at the same time progressed negotiations with Tanzanian government to identify incentives that would be deployed in order to make Tanzanian route more competitive as Kenya. Uganda initiated talks of building the pipeline for refined products between Kampala and Tanga . The two countries have also signed the momerandum of understanding to build a pipeline for natural gas from Tanzania to Kigezi in western Uganda in to facilitate the smelting of iron ore .
