Kampala destination a boost for SGR viability

Confirmation last week by Presidents Museveni and Uhuru that the Standard Gauge Railway (SGR) will run all the way to Kampala was indeed a breakthrough agreement which removes a key uncertainty in the regional infrastructure linkages. A Kampala destination puts the final dot in the Mombasa/Kampala SGR viability.

The SGR is already complete and in use up to Nairobi with completion of the extension to Naivasha expected by August this year.

In 2013 Presidents Uhuru Kenyatta, Yowei Museveni and Paul Kagame of Kenya, Uganda and Rwanda decided to jointly develop a number of regional rail and oil pipeline projects. Six years later, these projects are either under construction or are committed. However, the inter-country partnerships initially planned have changed especially with the entry of Tanzania into the regional infrastructure participation.

In respect of the railways, the initial plan was a Mombasa/Kampala/Kigali SGR. However, when Kenya and Uganda delayed commitments for the Naivasha/Kampala sections, Rwanda opted for a partnership with Tanzania for a Dar/Kigali SGR. The Tanzania’s central corridor SGR has already reached Morogoro with plans for Rwanda to finance the section from Isaka in Tanzania to Kigali via Rusumo.

While the funding for the Mombasa/Kampala SGR is by Chinese consortiums, financing for Dar/Kigali SGR is by various institutional and commercial sources. The Dar/Kigali line will be a “green” electrified SGR, a feature that Kenya and Uganda should strive to implement. Electricity also makes economic sense because it is a local resource while diesel is imported.

Yes there will now be two SGRs running parallel along the central and northern corridors respectively from the Indian Ocean into the Great Lakes hinterland with Dar and Mombasa ports competing for western-bound cargo. Specifically, when the SGR enters Uganda, it will present opportunities for extensions to Juba in South Sudan and also to towns nearer the Eastern DRC border.

In the meantime, “low hanging fruits” await Naivasha later this year when the SGR reaches the location. Thousands of tonnes of imported materials and equipment destined for the oilfields developments in both western Uganda and Turkana in Kenya will need to be moved. Construction works in both Uganda and Turkana are planned for next year.

A sufficiently-sized Naivasha Inland Container Depot(ICD) will be the ideal location for oilfield materials and equipment import clearance and consolidation for onward transfer to trucks.

Longer term, Naivasha will be the ICD of choice for western Kenya imports/exports including tea. The location will decongest Nairobi ICD; lighten the traffic on the escarpment route; while also opening up commercialisation and industrialisation of Naivasha.

The 2013 infrastructure agreement also included a Uganda/Kenya joint venture crude oil pipeline running from Lake Albert oil basins through Turkana oilfields to the grassroots port at Lamu. However in 2015, Uganda opted for a Uganda/Tanzania joint-venture pipeline through Tanzania to the port of Tanga.

This left Kenya to develop their Lokichar/Lamu pipeline. Project planning and commitments for the two pipelines to Tanga and Lamu are quite advanced, with 2022 target completion dates for both.

The 2013 regional infrastructure plans also included a 60,000 barrels per day refinery in Western Uganda. Project investment plans for this refinery are quite advanced, with investors already lined up and institutional frameworks defined. What is in doubt is the shareholding participation by the regional neighbours including Kenya.

To export oil production from the Uganda refinery, the plans had anticipated that a products pipeline would be constructed from Kampala to Kigali. Also in the plan was a reverse-flow pipeline between Eldoret and Kampala with flexibility to export oil from Uganda to western Kenya.

However, not much appears to have been committed in respect of these product pipelines between Uganda and its neighbours. In fact Kenya is still hoping to use its new jetty at Kisumu to transship products to Uganda – a feasibility inconsistency considering the ongoing plans for the Uganda refinery. .

One thing we have learned over the last six years is that regional political friendships and quarrels can shape, progress, or derail regional development. For the region, this is not good. Changing friendships and quarrels cannot be reliably used as long term regional planning tools.