Ideas & Debate

How EAC infrastructure plan has been evolving


A section of the Nairobi-Naivasha Standard Gauge Railway under construction. PHOTO | SALATON NJAU | NMG

A lot has changed since the 2013 “coalition of the willing” regional infrastructure development co-operation mooted by leaders of Kenya, Uganda and Rwanda.

The main areas of co-operation were the standard gauge railway (SGR), petroleum pipelines, and refineries. Project co-ordination committees initially held hectic meetings, and then it all slowed down as circumstances changed.

President Yoweri Museveni’s jewel in the crown project was the Uganda refinery. For President Uhuru Kenyatta, it was the SGR.

The “common denominator’’ anchor project between Kenya and Uganda was the crude oil export pipeline passing through northern Kenya. In respect of Rwanda, it was the SGR terminating in Kigali that inspired them most.

Subsequently, three significant developments have taken place. First, Ugandan private oil investors flexed their muscles to have their opinions taken into account in decisions pertaining to the crude oil export pipeline. French company Total took the leadership.

Secondly, in late 2015 John Magufuli emerged as the new president of Tanzania. Unlike the previous head of state he was ready to engage his East Africa Community (EAC) counterparts on regional infrastructure alternatives.

And Total, an accomplished operator in African diplomacy, seized this opportunity to convince Uganda to evaluate an alternative crude oil export route via Tanzania. Finally a pipeline project via Tanzania has been firmed up.

Thirdly, last month Total entered Turkana oil basin through the acquisition of a 25 per cent stake in fields held by Maersk Oil.

Should Total decide to keep the Turkana oilfields assets and possibly acquire controlling interests, two pipeline export options are likely to be presented by Total to the Kenyan government.

These are a pipeline to Lamu which is the policy option being pursued by Kenya, or an alternative link with the Uganda-Tanzania route.

READ: Total to take over Maersk Kenya oil stake in global deal

ALSO READ: What entry of Total into Turkana oil basin means

As the pipeline episodes played out, Kenya was steadily progressing the SGR with Kampala as the destination, to be followed with a final landing at Kigali.

Although Tanzania did offer an alternative SGR from Bagamoyo to Uganda and Rwanda, Kenya’s early start and progress is a definite advantage.

The Chinese SGR funding for the Uganda section has recently been firmed up. Once the SGR is destined for Kampala, it will be easy for Rwanda to negotiate funding for the section to Kigali.

Tanzania will thereafter find it difficult to economically justify an additional parallel SGR to the Great Lakes.

President Museveni is progressing the two-phased 60,000 barrels per day refinery with or without the involvement of her EAC neighbours.

With the collapse of the Uganda-Kenya crude oil export pipeline joint venture, there will be no incentive for Kenya to participate in a “reverse flow” products pipeline between Eldoret and Kampala which Uganda was pushing for to link its refinery products with Western Kenya demand.

On the other hand, the ongoing marine oil export jetty being build at Kisumu port by Kenya Pipeline Company (KPC) will offer a regional alternative for Mombasa products imports to the Great Lakes.

With the closure of the refinery in Mombasa in 2013, there are no indications that Kenya has plans for local refining.

Instead Kenya is working on strengthening its fuel products imports receiving and transmission infrastructure.

South Sudan appears locked in the current crude oil export system via Port Sudan on the Red Sea.

Tariffs for using this route are quite high and unless renegotiated the export route remains economically unsustainable.

Future alternative crude export options for the country are either through Kenya or Uganda. Also, an option via Ethiopia is not unrealistic.

Yes out of the coalition of the willing projects we are progressing towards a regional SGR that could eventually end up linking Mombasa port with Uganda and Rwanda.

This will add tremendous value to Mombasa port which has seen major expansions over the past decade.