Kenya and Uganda have initiated discussions on extending the petroleum pipeline to Kampala, a significant infrastructure project poised to impact the region’s fuel import market. This development follows Uganda’s decision to start its own fuel importation in early July, ending its reliance on Kenya for the importation and supply of refined products.
Currently, Uganda is importing oil products through a deal between the Uganda National Oil Corporation (Unoc) and Vitol Bahrain. This arrangement mirrors Kenya’s government-to-government agreements with Gulf oil majors, with Uganda aiming to reduce pump prices below those previously offered by Kenyan dealers. Despite this, Uganda continues to use Kenya’s Port of Mombasa (New Kipevu Oil Terminal) and Kenya Pipeline Company (KPC) infrastructure for the delivery of products to the Eldoret depot, from where they are transported by road.
Uganda’s Energy Minister Ruth Nankabirwa is leading the preliminary planning for the pipeline extension, with the first meeting held in Nairobi this week. “I am in Kenya to begin planning and preparation for the proposed Eldoret-Kampala-Kigali pipeline,” Nankabirwa said, noting that the Nairobi visit also included familiarizing herself with Kenya Pipeline’s operations, infrastructure, and personnel.
On Tuesday, she chaired a bilateral meeting with Kenya’s Petroleum PS Mohamed Liban and KPC Managing Director Joe Sang, among other senior KPC officials. They reviewed the proposed Eldoret-Kampala Refined Petroleum Products Pipeline.
The idea for the pipeline was first conceived in 1995 through the Joint Co-ordinating Commission (JCC) and formalized with a Memorandum of Understanding (MoU) between Uganda and Kenya. A feasibility study for the pipeline extension was awarded to an international firm in 1997, with the report submitted in 1999.
This followed a study funded by the European Investment Bank, which confirmed the project’s viability, including a potential extension to Rwanda.
In May of this year, President William Ruto and Uganda’s Yoweri Museveni revived the plans, agreeing to extend the pipeline to ensure a stable supply and security of petroleum products for Uganda.
Kenya is set to construct a pipeline from Eldoret to Malaba on the Kenya-Uganda border, with Uganda building a connecting line to Kampala.
“We have instructed our respective Ministers to urgently mobilize resources for the implementation of this shared regional infrastructure and to report on progress by the end of 2024,” President Ruto stated in Nairobi during a recent three-day state visit by President Museveni.
The pipeline will eventually extend to Kigali in Rwanda and potentially to Bujumbura in Burundi, with each country responsible for developing the infrastructure within its borders. A joint “transaction advisor” will be appointed to ensure quality control.
In recent years, Kenya has seen a significant loss in its petroleum export market to Tanzania, with Uganda being a key competitive battleground. The pipeline extension is expected to give Kenya a competitive advantage over Tanzania in exporting refined products via the port and pipeline, despite losing control over the export market’s sales margins as Uganda starts importing its own products.
Uganda imports approximately 2.5 billion liters of petroleum annually, valued at around $2 billion (Sh265.6 billion), with Kenya Pipeline Company handling about 90 percent of these volumes. Nankabirwa’s visit is timely as Uganda addresses cost-related issues, including the doubling of bond fees for cargoes destined for Kampala and the KPC pipeline charges, which could affect pump prices in Kenya and impact exports.
Additionally, Kenya and Uganda are considering extending the Standard Gauge Railway from Naivasha to Malaba, and further to Kampala and the Democratic Republic of Congo, to create an efficient and sustainable transport route for goods.
