Local firms lose claim for stake in oil pipeline study
Workers at the Ngamia 1 oil rig in Turkana County. The East African Community has rejected push by local firms for special treatment in the regional oil pipeline deal. FILE
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The open nature of the contract statement prompted local bidders to seek clarification from the three nations amid demands for the reservation of a 40 per cent stake.
Local firms have lost their bid to fence in 40 per cent of the multi-billion-shilling contract for design of the East African crude oil pipeline after member states rejected calls for special treatment.
The local bidders had written to the tender team demanding that at least 40 per cent of the design and feasibility studies contract be reserved for firms originating from the East African Community to promote local participation.
Energy and Petroleum PS Joseph Njoroge said that the contract terms would remain as earlier stated in the call for proposals (RFP) by Kenya, Uganda and Rwanda, which are undertaking the project.
“The local content to be as stated under clause 2.3.2 (i) in the RFP,” he said in response to the demands by the local bidders. The clause states that winning bidders are not compelled to partner with local firms and may do so if they do not have all the expertise for the job.
“For the purposes of capacity building, the bidders are encouraged to enter into consortia with, or sub-contract part of the assignment to local consultants originating from the three countries,” the bid document stated in part without mentioning if a special stake of the contract would go to local firms.
The open nature of the contract statement prompted local bidders to seek clarification from the three nations amid demands for the reservation of a 40 per cent stake.
The three EAC member states are seeking a consultant to carry out a feasibility study and a preliminary engineering design for the construction of the pipeline and a fibre optic cable from Hoima in Uganda through the Lokichar basin in northwest Kenya to Lamu, and tank terminals in Hoima, Lokichar and Lamu.
The project will also involve the construction of a 9km pipeline from the Lamu tank terminal to offshore mooring buoys. “The pipeline is to be developed as a single project but split into two lots, namely Hoima to the Uganda-Kenya border and from the border to Lamu,” the Energy ministry in Kenya said in a call for bids last month.
Mr Njoroge said the aim of having a single consultant for the whole project was to ensure consistency in the quality of the whole pipeline.
East Africa has become potentially lucrative for international oil firms after Kenya and Uganda’s commercial oil finds and discoveries of gas off the coast of Tanzania and Mozambique.
Tullow Oil and Africa Oil, which control blocks in Kenya, have estimated discoveries in the South Lokichar basin at 600 million barrels, an amount experts say is enough to make a pipeline viable even without Uganda.
The two companies last month announced they had found additional oil and gas reserves at their northwest Kenya blocks. Uganda estimates it has oil reserves of 3.5 billion barrels.
The plan for a single consultant and transaction adviser was approved by the governments of Kenya, Uganda, Rwanda, South Sudan, Tanzania and Burundi in early May. These countries make up the East African Community, although South Sudan is still only an applicant to join the group.
