29 January 2013

Uganda: Govt, Uganda Seek Oil Pipeline Investor

Kenya and Uganda are seeking a new private investor to build and operate a refined petroleum products pipeline which is projected to be operational in two years.

The investor will be issued with a 20 year concession for the pipeline that will run from Eldoret to Kampala which is estimated to cost Sh25.5billon

The two governments had in 2008 entered an agreement with Libyan company, Tamoil, but terminated it last year citing failure by the company to fulfill some of the set conditions.

The Kenyan and Ugandan governments yesterday invited Expression of Interest from experienced firms or consortia for pre-qualification to bid for the project.

The project consists of development and operation of a multi-product, 325 km pipeline which will pass through Malaba and Jinja.

Energy Permanent secretary, Patrick Nyoike said on the phone the pipeline size will be either 12 or 14 inches diameter with capacity to pump 500-700 thousand litres per hour.

"If all goes well, by end of next year or early 2015 the pipeline should be operational,we give it about 24 months construction time," he said. He could not disclose cost estimates saying it might influence the bidders quotes.

The cross-border pipeline will interconnect with existing 14 inch diameter pipeline running from Nairobi to Eldoret.

Currently, refined petroleum products are transported by road between Eldoret and Kampala, resulting to high pump prices for consumers. The existing pipeline between Mombasa and Eldoret is also dilapidated and serves below its full capacity. Preparations are underway to replace the 35 year-old Mombasa- Nairobi pipeline.

"The project will also include a common user depot at the pipeline terminal in Kampala," said the press advertisement.

In such an arrangement,the private company owns and operates the facility during the concession period, with the prime goal to recover the costs of investment and maintenance while trying to achieve higher margin on project.

The announcement said the private investor or the lead partner in the consortium should have a minimum annual turnover equivalent of $500 million (Sh42.5 billion).

Copyright © 2013 The Star. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.