SGR and oil pipeline to Kampala now look certain to happen

President William Ruto and Uganda's President Yoweri Museveni during his two-day State visit to Kenya.

Photo credit: PCS

When I watched the two presidents William Ruto and Yoweri Museveni announce a series of MOUs at State House last week, I became convinced that SGR extension from Naivasha to Kampala, and petroleum pipeline from Eldoret to Kampala will indeed happen.

The two projects will reduce transit time for goods while decongesting our highways and making them safer. Preliminary scoping for the two projects had already been done making it easier to hit the ground running.

In respect of SGR, electrification should be done all the way from Mombasa to Uganda and beyond, as a commitment to climate goals and use of local electricity resources instead of imported diesel. Tanzania electric SGR is a best practice to be copied. Further, the project should include robust capacity for regional inter-city passenger trains to promote regional business travel and tourism. Another glaring business opportunity is the bulk haulage of mineral ores for export especially from DRC.

Priority regional linkage beyond Kampala should be Kigali which has a competing opportunity to link up with Central Corridor SGR from Dar. Tanzania has indeed declared intentions to link with Rwanda. Otherwise, Juba, Eastern DRC (South Kivu and North Kivu) are major candidates for linkages to Mombasa.

The oil pipeline extension from Eldoret is a logical development from the recently concluded plan for Uganda-funded direct imports from Arabian Gulf which, with the pipeline extension, will be transhipped direct from Mombasa to Jinja and Kampala. This is indeed efficient and will cut out transit time, stock losses and costs for Ugandan importers. Economic downsides for Kenya are potential loss of Great Lakes exports which will shift to Jinja and Kampala. Marine loadings from Kisumu KPC jetty to Uganda will also dwindle.

The pipeline extension to Uganda was part of a 2013 regional infrastructure masterplan whose design concept was a reverse flow pipeline to receive oil imports from Eldoret while exporting products to Kenya from a planned refinery in Western Uganda, which remains on the table. And should Kenya decide to commercialize Turkana oil with a refinery at Lokichar (with a pipeline linkage to Eldoret), it will be an opportunity for Kenya to export products to Uganda via the extended pipeline to Kampala.

But planners and investors in these petroleum projects should cautiously note that in another ten years time, EVs will be dominating our roads, and these will not require petroleum. Project payback times will therefore need to reckon with this eventuality.

George Wachira, Petroleum consultant, [email protected]

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.