Ideas & Debate

Kisumu oil jetty will spur EA oil transport

Engineers inspect the newly constructed oil jetty at the Kenya Pipeline Company on February 28, 2018. PHOTO | TONNY OMONDI
Engineers inspect the newly constructed oil jetty at the Kenya Pipeline Company on February 28, 2018. PHOTO | TONNY OMONDI 

Kenya Pipeline Company (KPC) recently announced completion of a new oil loading jetty at their Kisumu oil terminal.

This introduces an alternative regional oil export option across Lake Victoria. It revives the lake petroleum transport infrastructure that collapsed in 1977 when the EAC acrimoniously wound up.

KPC must now market the jetty to the lake neighbours to ensure that it becomes part of their oil imports options. For logistics completeness, there must be barges (small tankers) on the lake. In the old days we had MV Nyangumi that ended up with Tanzania when the EAC assets were shared.

There must also be counterpart oil jetties in good condition at various lake ports ready to safely receive and discharge products into bulk oil terminals at those ports. I am here talking of Mwanza, Musoma and Bukoba in Tanzania; and Port Bell and Jinja in Uganda.

Further, the transport economics must be competitive enough to incentivise importers to use the lake option in place of road transport from KPC depots at Kisumu/Eldoret or from the port of Dar es Salaam.

Above all, the regional governments of Tanzania, Uganda and Rwanda will need to give a “political” nod to the lake imports option as this has to be incorporated into their national petroleum imports and customs revenue collection systems.

Tanzania, like Kenya, has a centralised petroleum imports tender system which defines official oil imports entry points for the purposes of retail price calculations and regulation.

Uganda has been working on a petroleum distribution master plan with the planned new refinery in the Lake Albert oilfields as the focal point of products supply, connected to a primary distribution and export terminal in Kampala.

Rwanda is also planning a central oil products receiving and re-export terminal in Kigali with connection to the Kampala primary depot giving the country the flexibility for sourcing products from Mombasa or from the planned Uganda refinery.

This is in addition to imports by road from the Port of Dar Es Salaam.

Included in the regional petroleum infrastructure plan discussed by Presidents Uhuru, Museveni and Kagame in 2013 was a reverse flow pipeline between Eldoret and the planned Kampala terminal with the flexibility to pump products either direction between Eldoret and Kampala.

I will now indulge in some history by switching back to 1985 when I was a director of a multinational oil company in Kenya and narrate a story involving export of bulk diesel to Musoma in Tanzania from a Kisumu oil jetty using MV Nyangumi.

Tanzania had in 1984 opened its borders with Kenya after the 1977 closure. In early 1985 I was invited to Dar by the boss of TPDC (Tanzania Petroleum Development Corporation) to discuss resumption of diesel supply from Kisumu to Musoma using MV Nyangumi.

At the time, Tanzania was undergoing a major foreign exchange crisis and the transport infrastructure was in serious disrepair. Musoma power plant was down without diesel.

I jumped into the inaugural Kenya Airways #ticker:KQ flight to Dar after the border opening. We agreed diesel export terms with TPDC with a caveat that the irrevocable and confirmed Letter of Credit should specifically be counter-signed by the governor of Central Bank of Tanzania.

The TPDC boss called President Julius Nyerere to give him the good news, that it was possible to supply diesel to Musoma within six weeks. Excited, the President requested that I be taken to State House to personally re-assure him.

Mwalimu Nyerere told me that Musoma was his home area and it was not looking good to have no power. He actually called the governor of the Central Bank to ask him to expedite the LC.

He then requested that we make similar arrangements to supply Tanga Cement with fuel oil and a tyre factory in Arusha with solvents from Mombasa. The two were down without critical supplies. I confirmed it was to be done.

In the next few months President Nyerere retired from office to his Musoma home. But there was already light in Musoma because the power plant had a constant supply of diesel from Kisumu.