Why Kenya Lost Uganda Pipeline Deal

Nearly four years after Uganda abandoned Kenya in building an oil pipeline that would have transported its oil to Lamu, it has now officially signed a $3.5 billion deal with Tanzania, leaving Nairobi to walk alone.

The construction is expected to start before the end of the year and it will help Uganda exploit oil discovered near Lake Albert in 2006. Reserves in the area are conservatively estimated at some 1.7 billion barrels.

Uganda said it dropped Kenya after it realised it would be cheaper using Tanzania’s Tanga port.

Ugandan government also said the Kenyan route would delay the project, as it lacked roads and was always affected by monsoon winds for up to three months annually.

A report by Ugandan experts also concluded it was harder to secure land in Kenya, since it takes about 24 months to compensate land owners and get down to work.

On the contrary, since the Tanzanian government owns all the land, access would be easier.

The other deal breaker for Kenya was security. Lamu is seen as closer to Somalia on the Indian Ocean than Tanzania, feeding into fears that the pipeline could be a target for Al-Shabaab.

The fact that the Tanga port was already operational gave it an edge over Lamu, which is still under construction.

Kenya had banked on Uganda to join hands in building the critical infrastructure, which has been blamed for the delays in commercialisation of its oil finds.

Abandoned, Kenya will now go it alone, and has maintained it will build its Sh121.45 billion pipeline from Lokichar, where it struck oil in Turkana County, to Lamu, where it is building its port.

*Daily Nation*

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