5 February 2013

Uganda: 14 Firms Vie for Kenya-Uganda Pipeline Deal

At least 14 companies have expressed interest in the construction of the Kenya - Uganda petroleum pipeline.

The new tender for the project comes after both Kenya and Uganda agreed to terminate the contract that was earlier awarded to Libya's Tamoil East Africa Ltd. Under the new bidding conditions, a private investor will be required to own the pipeline for 20 years before it is transferred to the two governments. The 14-inch diameter pipeline will run 352km, from Eldoret to Kampala. The project will also include a common user depot at the pipeline terminal in Kampala.

The companies' capital base and their experience will come under critical assessment. "The investor /lead investor must have a minimum annual turnover equivalent to United States Dollar 500 million. Evaluation of the financial statements will be on the bidders' financial strength as depicted by, among others, the return on capital employed, liquidity and debt ratios," according to the joint coordinating commission for the Kenya-Uganda Refined Petroleum Products tender announcement.

The statement adds that "Capability and experience in successful development, construction, operation and maintenance of a similar pipeline" will be considered in the evaluation process. The contract previously awarded to Tamoil East Africa Ltd, a subsidiary of the Libyan African Investment Portfolio (LAIP), was cancelled following reports from the Ugandan government that the company had failed to comply with objections agreed under the memorandum of understanding of 2008.

The fall of Muammar Gadafi's government in 2011 to a civil uprising, and earlier United Nations sanctions that called for the freezing of Libya's foreign assets, weighed heavily on Tamoil's plans. The governments of Uganda and Kenya are eager to have a refined petroleum products pipeline to ease the transportation of oil products following the discovery of oil resources in Uganda, and further explorations in Kenya.

According the National Budget Framework paper for the year 2012/2013, Uganda considers the construction of the pipeline a priority. "Government is still committed to develop the Kenya-Uganda oil pipeline despite the challenges experienced in both countries of land acquisition and the need to redesign the infrastructure to cater for the future export of petroleum products from Uganda."

The bidders:

National Oil Corporation of Kenya & Indian Oil Corporation

Punjloid Infrastructure Limited & Inpex Construction Limited (Japan)

Capital star steel limited - combining Capital Africa Steel (Pty) Ltd (South Africa) & Seven Star Group (China)

China Petroleum Pipeline Bureau, a subsidiary of China Oil and Gas Pipeline Bureau

Eiffage SA (France ) & Consolidated Contractors Group

Turner and Townsend (which is building a Uganda Breweries plant in Mbarara)

Oil India limited and Kalpataru Power Transmission Limited

Mota - Engil, Engenharia e Construção (Portugal)

Oasis Consortium Group

Denys NV (Belgium),

Alfaraa Jihind Consortium,

Vitol SA (France)

National Gas Company (Trinidad and Tobago)

Orascom Construction Industries (Egypt).

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