Delays by the Libyan oil firm, Tamoil East Africa Ltd, to construct the long-awaited oil pipeline from Eldoret to Kigali through Kampala, and then on to Burundi, is causing concern among EAC governments.
Speaking to The New Times yesterday, the Minister for East African Community Affairs, Monique Mukaruliza, said that Tamoil has up to six months to get its house in order.
“Ministries from the four countries responsible for Energy recently gave Tamoil a six-month deadline to have started construction works; if it fails the contract will be terminated and the project will be transferred to the EAC secretariat,” she said.
Mukaruliza added that the memorandum of understanding that was signed between the oil firm and officials from Rwanda, Uganda and Kenya, stipulates that if the company does not fulfil its obligation, the contract will be nullified.
A feasibility study carried out by Science Application International Corporation (SAIC Energy), a US firm in 2007, showed that the pipeline was a viable business for Rwanda and would cost up $193.6 million.
Work on the Uganda part of the pipeline, which was supposed to have been completed by 2007 after the Libyan firm won the contract a year before, has not even started.
The EAC Minister allayed fears that the construction of a mini-refinery by the Ugandan government after the discovery of oil in south western Uganda will affect the pipeline.
“We have written to the Libyan oil firm asking them to let us know if they are still interested in the construction of the pipeline, if not we shall devise other means,” she noted.
She stated that the planned oil pipeline would ease the cost of transport as the country depends on imported oil transported by road.
The pipeline to Rwanda and Burundi would also mean that neighbouring markets such as the Democratic Republic of Congo (DRC) that currently rely on shipments from Mombasa, would use the new closest points of sale.