East Africa Pipeline Extension Remains in Doubt
|
|
|
|
Tuesday, 23 February 2010 |
|
The plan to extend the Kenya oil pipeline to Uganda is in doubt, three
years after the project was awarded to Libyan state company Tamoil East
Africa.
The Kenya Pipeline Company (KPC) —which is the technical and
investment arm of the government in the proposed project — says it is
awaiting a final decision. “A final investment decision on the
project is still awaited,” Mr Selest Kilinda, the managing director,
said on telephone. This follows an earlier decision by the government
to reduce its stake in the venture to 13 per cent, down from 24.5 per
cent, while Uganda’s share is at about 12.3 per cent.
The Libyan firm now controls over 76 per cent of the Joint Coordinating
Commission (JCC), the new joint venture company contracted-in January
2007 to build, own and operate the pipeline for 20 years, before
transferring ownership to the two governments or other private sector
players.
The government’s new share holding allows it one seat on the JCC
board.Energy permanent secretary Patrick Nyoike recently said that the
Government had ceded control because it did not have enough money to
meet its contribution for the original stake, where Tamoil was to take
up 51 per cent.
At the close of 2009, the project’s cost went up four times to $300
million (about Sh24 billion), following a review of the original
design. While the initial tender cost was $75 million (about Sh6
billion), the project has since quadrupled following a review of the
planned pipe’s diameter from eight to 14 inches.
Intended to meet the growing demand of petroleum in Kenya and the
region, questions have arisen on whether Uganda is still keen on the
project after discovering oil. Experts want a review of the entire
petroleum supply infrastructure to identify areas for new investment
and recommend improved systems and processes. “The new Ugandan
oil scenario will need to be taken into account in any future
investments on the petroleum infrastructure,” said an analyst.
KPC serves as a key supply line for oil marketers and stores products
in its Nairobi, Kisumu, Nakuru and Eldoret terminals, mainly for supply
to East Africa’s land-locked countries such as Uganda, Rwanda and the
Democratic Republic of Congo.
PetrolWorld 190210 Source: BusinessDaily
|
