The news that Kampala was ditching Kenya’s oil pipeline project hit the top bureaucrats like a thunderbolt. East Africa’s leading economy had hoped that Uganda would use the proposed Northern Corridor.
Uganda’s partners, particularly the French oil giant Total E&P, were uncomfortable with the northern Kenya route, which they consider expensive and a major security risk in the face of recent terrorist activity in the region.
Uganda also expressed concerns about the choice of Lamu as the location for the pipeline terminal over fears of monsoon winds. There were also concerns around the financing of the project, with Uganda fearing that it would take too long and delay exports of its crude oil.
Uganda has opted for a pipeline connecting Hoima to Tanzania’s port of Tanga. The route was attractive because it eased the security concerns raised by Uganda’s partners, was considered less expensive, and also because the port is already fully operational, while the the Lamu port is a work in progress.
Kenya’s choice of the Northern Corridor was strategic. While taking care of its own oil find in Lokichar, it can open up the region to significant infrastructure development and the resultant economic activities.
The northern frontier, its immense potential notwithstanding, has always been a headache for successive Kenyan governments. Its expansiveness, harsh climatic conditions, underdevelopment, and residents’ complaints that they are neglected make the region vulnerable to terrorist activity. The pipeline was Kenya’s perfect opportunity to change this narrative.
In choosing the route, Kenya also considered the likelihood that oil-rich South Sudan might also want to use it to transport its oil. Kenya’s oil pipeline will now run from Lokichar and terminate at the Lamu port.
ECONOMIC INTEREST
The perception that Kenya was being sidelined by its regional partners was reinforced when Rwanda announced that it was exiting the multibillion-shilling standard gauge railway (SGR) in favour of its own railway project through Tanzania. This means that Kenya’s SGR will likely terminate in Kisumu.
Uganda’s and Rwanda’s decisions are in their own strategic economic interest and have got nothing to do with Kenya’s attractiveness as an investment destination or its foreign policy.
Their decisions were influenced by cost, timeliness, distance to the port, and security considerations.
These are parameters that could change in the future as regional economies expand and investors start considering other faster, more efficient options.
So, while a short-term loss is inevitable owing to Rwanda’s expected withdrawal, the long-term benefits in decongesting the port and as an alternative future cargo transit route for Rwanda, Burundi, and the Democratic Republic of the Congo should not be understated.
Uganda, which is Kenya’s largest market for manufactured goods, remains a key partner in the SGR while South Sudan is expected to sign up at a later date.
Despite Rwanda’s exit, the SGR remains viable since Uganda and South Sudan account for the largest cargo volumes in the region. Rwanda also has the option of transporting its cargo through Kampala as a connection to the SGR besides using the shorter Dar es Salaam route.
As governments make policy decisions and determine the fate of major infrastructure projects, they cannot take away the capability and desire of the people of East Africa to trade and relate with one another. Long before the East African Community was revived and the Common Market Protocol came into force, East Africans conducted business.
Kenya has the advantage of a large pool of well-trained and enterprising workers who provide their skills and experience both to the public and private sectors in the region. Our true advantage lies, not in pipelines and railways, but our determination to keep developing the skill set that the rest of the world wants.
