Mining Weekly

The governments of Kenya and Uganda have embarked on a fresh process to construct an oil pipeline connecting the two neighbours after terminating a contract awarded to Libyan company Tamoil in 2006.

After it had become apparent that the Libyan company, which was badly affected by the fall of the Muammar Gaddafi regime last year, could not implement the project, the two governments decided to terminate the contract last year.

The two governments have now invited expressions of interest from companies keen on implementing the project, which has a $300-million price tag.

“The objective of this prequalification is to identify interested investors with capa- city and experience in developing similar projects to enter into a partnership with the two governments to develop and operate the pipeline,” the two governments say in a statement.

The Kenya–Uganda refined petroleum products pipeline, which will stretch from Eldoret to Kampala through Malaba at the Kenya-Uganda border, will be built as a public –private partnership under a 20-year ‘build, own, operate and transfer’ arrangement.

The 352 km pipeline will interconnect with the existing 14-inch-diameter pipeline running from Nairobi to Eldoret.

The pipeline will include a spur line to Jinja, in Uganda, as well as a common-user depot at the pipeline terminal in Kampala. It will be capable of transporting 220 000 ℓ/h.

Both Uganda and Kenya have made oil discoveries in recent times, with the former, which has known oil reserves in excess of 3.5-billion barrels, already in the process of building a refinery with capacity to process 180 000 bb/d.

Tamoil, a subsidiary of Libyan African Investment Portfolio (LAIP), won the contracts to construct the Eldoret–Kampala pipeline in 2006, and, in 2008, to extend it from Kampala to Kigali.

The freezing of LAIP assets following the collapse Gaddafi’s regime caused a financial crisis for Tamoil, making it difficult for the company to implement the project, which had been on the drawing board since 1995.