The New Times (Kigali)
17 September 2008
Posted to the web 17 September 2008
Edmund Kagire and Agencies
CONSTRUCTION of the long awaited oil Pipeline from Eldoret to Kampala is set to kickoff early November 2008, Tamoil East Africa Ltd has announced.
The company was contracted to construct the 354 km pipeline to supply petroleum oil products to Uganda, Rwanda, Burundi, Eastern D.R Congo and South Sudan. Once completed, the pipeline will be named, East African Pipeline Company.
Gamal Buargoub, the Project Engineer of Tamoil said construction of the Eldoret- Kampala phase will last 18 months. It will cost over $73m (Frw40 billion) by the time of its completion in 2010.
After completion of the Eldoret-Kampala section, Turmoil will proceed to construct a pipeline connecting Kigali to Kampala. The development is expected reduce the high transportation costs of oil products from Kenya to its landlocked neighbours by road.
"We are in the final stages of negotiations and we think the cost of putting up the project will be a bit high because we shall use Scada System and optical fibre cables which are very expensive, yet important as far as the pipeline is concerned," explained Buargoub, who is currently in Uganda to finalise ground preparations.
He said that both technologies are very vital for communication purposes and detecting unexpected mishaps, like oil leakage and tampering or any other emergence along the 354 km pipeline.
The first phase of the pipeline will run from Eldoret to Jinja. Three more reservoir tanks will be constructed, to add to the already existing.
In Kampala where 22 oil storage tanks will be constructed. The construction of the pipeline will be fully funded by the Libyan government and Tamoil, the mother company of Tamoil East Africa Ltd.
The company won the rights to construct the pipeline after beating off stiff competition from China Petroleum Pipeline Engineering Corporation and MISA-Madhvani International South Africa/Shell Uganda, joint bid.
In March this year, Uganda and Rwanda signed an agreement to extend the pipeline initially planned to stop in Kampala to be extended to Kigali, the Rwandan capital. The agreement was signed by Uganda's Energy Minister Daudi Migereko and his Rwandan counterpart Eng. Albert Butare.
Presidents, Paul Kagame of Rwanda, Yoweri Museven of Uganda, Mwai Kibaki of Kenya, Pierre Nkurunzinza of Burundi and Libyan leader Muammar Gaddafi witnessed the signing of the agreement in Kampala.
The Libyan company will manage the pipeline for the next 20 years. After the contract, the pipeline will be handed over to the countries.
Oil industry players say construction of the pipe line may reduce fuel prices that have also been unstable for quite sometime.
It is also hoped that it may relieve the pressure exerted heavy fuel tankers that run on the Mombasa-Kampala- Kigali-Bujumbura highway daily.
The countries spend millions of dollars on road maintenance annually. Environmentalist also blame the fuel tankers for contributing significantly to pollution through the emission of exhaust gases.
Who is Tamoil?
Tamoil East Africa belongs to the Tamoil Group, whose holding company, Oilinvest (Netherlands) is a major player in the oil industry.
Since its incorporation, the group has developed both its refining and marketing activities in Europe and has now moved into Africa.
Tamoil has operations in Switzerland, Germany, Spain, the Netherlands, Italy and France with operations in North Africa and East Africa as well.
The company recently bought off Shell companies in Ethiopia, Sudan and Djibouti. According Godfrey Mugabi, Tamoil East Africa's Operations manager, the extension of the pipeline will ease the transportation of oil from Kenya to landlocked Uganda, Rwanda, Burundi and the Democratic Republic of Congo.
"The pipeline will inevitably go a long way in reducing wear and tear on the roads, reduce risks associated with road transport and facilitate stabilisation of fuel supplies in Uganda, Rwanda, Burundi, D R Congo and even Southern Sudan," Mugabi explained.
The project was supposed to begin sometime in 2004, but it has been beset by delays. The delay is attributed to the bilateral nature of the project. Each country has national interests, these have clouded what should essentially be business decisions.
The Kenya Pipeline Company (KPC) has been providing technical expertise to the Kenya and Uganda governments on the projects implementation and will take up a 24.5 per cent stake in the 8-millimetre diameter pipe. The pipeline comes at a time significant quantities of crude oil have been discovered in western Uganda.
Rwanda is also exploring oil prospects. Analysts say when Uganda starts to drill its own oil, it will need an oil pipeline to transport it to the refinery in Mombasa.
When Uganda establishes its own refinery, it will still need a pipeline to deliver the oil cheaply to Mombasa.
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