Kenya Policy Makers Must draw lessons From Uganda Decision to take Oil Pipeline to Tanzania

By Mbatau wa Nga

The announcement that Uganda and Tanzania had signed an agreement to build an oil pipeline between the former’s oil fields and Tanga Port did not surprise analysts following the ping-pong game between Kampala, Nairobi and Dar-es-salaam.

This should not have surprised Kenyan policy makers, either, because Uganda had contracted Total, a local investor, to conduct a feasibility study on the crude oil pipeline and the French company had made no bones about its preference for the Southern route.

It was easy, therefore, for the consultants to raise concern over the perceived insecurity in Northern Kenya following several Somali terrorists’ attacks in the region. But evidence on the ground suggests that though these fears may have been genuine, the key factor that swung the pendulum southward was political.

Analysts opine that Ugandans will pay a heavier price than they needed to for this decision, just as their Tanzanian counterparts are still economically hurting from their country’s decision to look South when they joined Southern Africa Development Community (SADC) and weakened their trade ties to the then Preferential Trade Area (PTA) countries a few decades ago.

Be that as it may. Kenyan leadership would be well advised to accelerate efforts to bring the country’s crude oil to market by road and rail transport.

Revelations that the country could use trucks to carry the crude from the Turkana oil fields to Eldoret where it would be picked up by Rift Valley Railways (RVR) who would transport it to Kipevu-based Kenya Petroleum Refineries (KPR) are welcome.

Revelations that Kenya would be among the 10 cheapest countries to produce crude oil well ahead of major continental exporters such as Nigeria and Angola should spur the government and the private investors to step on the accelerator pedal to bring the commodity to market.

The low production costs mean that Kenya would still be making a profit if it were already producing and selling crude oil in the international markets at the prevailing prices.

Uganda’s decision to route its crude through Tanzania should serve as a wake-up call for Kenya to quickly build its ties to Ethiopia in the event that Kampala decides to strengthen its trade links with its southern neighbor at Nairobi’s expense. The potential size of the Ethiopian market of about 100 million people should be enough attraction.

One of the best ways of doing this is by speeding up the construction of the Lamu Port Southern Sudan-Ethiopia Transport (Lapsset) project’s road and rail routes. This would give the two land-locked countries a cheaper transportation route to the port for their imports and exports.

Admittedly, this is an expensive undertaking that has yet to attract foreign investment in the way the Standard Gauge Railway did. The other and faster way of stealing the country competitors’ thunder is to build the required infrastructure and pass the necessary laws to turn Mombasa into a free port operating the same way Dubai does.

Those who visited the United Arab Republic (URA) before the purposeful construction of Dubai as a Middle East hub will testify the long-road the country has travelled since then. Fortunately for Kenya, Mombasa has already got the kind of infrastructure, including hotels and office spaces, that Dubai could only dream of then.

Business visitors In addition, Kenya—not just Mombasa— has geographical advantages that cannot be duplicated by any of its neighbours. The recent developments at Mombasa Port mean that the country would spend relatively little money to turn it into a regional import and export hub.

With a little marketing finesse, there is no reason why the port would not draw customers from as far as West and Central Africa to supplement those from Ethiopia, Sudan—not just the South—and the existing East African ones. The increased volume of imports and the number of visitors to the Kenyan Coast would reinforce the argument for the construction of Lapsset project.

At the very least, the increased business activity would act like a tide that raises all boats. Kenya Airways, would be expected to reap big from the increased number of business visitors as it is already one of the three major continental airlines.

This Article was first Published by the Standard Newspaper