Kampala Uganda — Tamoil wants assurances from the Uganda and Kenya governments that it will not make a loss if it goes ahead to build a pipeline with reverse capability.

Reverse capability means that beside the pipeline bringing oil product to Kampala, it will also be capable of taking oil back to Mombasa.

The two governments have asked Tamoil to change the design so that it can take the oil from a Uganda refinery back to the Kenya market or elsewhere. The push for a redesign comes after Uganda's discovery of huge oil reserves in the Albertine rift.

A Commissioner in the Petrol Supplies Department, Rev. Frank Tukwasibwe said this last week, adding that the 'private developer' had not yet made the final investment decision on the pipeline and had delayed to make clarifications thus holding back the project.

Tamoil won the deal to build the 350 km pipeline from Eldoret to Kampala. It was originally expected to be complete in 2007 but the project has never got off the ground and has been hit by delays.

More recently the issue, which is holding the project back is the requirement to make it 'reversible' to bring and take products from expected Ugandan refineries to Mombasa.

Tukwasibwe said that before Tamoil can make the final decision, it has to clarify on some issues in an 'optimisation report' it provided to the government on details of the reverse flow capability and which were queried by the technical committee.

"The technical committee raised concerns of the optimization report for clarification but few of these issues were attended to and this is standing in the way because it needs the clarifications for it to be able to report on the pipeline design," Tukwasibwe said.

"This is hindering the technical committee's ability to answer and make recommendations to the Joint Coordinating Committee (JCC) because it lacks sufficient information to recommend to the respective governments the way forward."

The JCC is co-chaired by the Permanent Secretaries of both countries' energy ministries and is responsible for implementing the project for their respective governments.

"So the governments have yet to meet and consider this development. This compensation is like a new demand and this is the reason for the delay. The governments have to consider what would be appropriate," Tukwasibwe said.

The reverse flow capability became necessary following the discovery of oil in Uganda and the fact that Uganda plans to build an oil refinery, something that would necessitate taking oil to the Kenya market as Mombasa. The pipeline was originally intended to bring oil products to Uganda from the Kenyan sea port of Mombasa.

"Approval of the pipeline design is necessary for Tamoil to make the final investment decision which in turn would enable the process of compensating concerned land owners as well as the project to take off. Tukwasibwe said otherwise the major agreements needed for the developer to take a final investment decision had been finalized by the JCC but have to be cleared by gov't.