May 10th, 2017 – Chipped on the edges, potholed in the middle, and narrow in width, Uganda’s roads can hardly offer the space that fuel trucks desire.
The alternative now remains a new transport route for petroleum supplies over Lake Victoria, although other transport alternatives remain firmly in play, writes Jeff Mbanga (The Observer).
Mahathi Infra Uganda Limited, the Indian firm that plans to create a new petroleum transportation network along Lake Victoria, says the machinery needed to put up the required infrastructure for the project to take off is already on site and that 30 acres of land have also been acquired.
The company says work to build the barges – where petroleum supplies will be loaded from Kisumu and moved to Kampala – is already underway. Also, the company is to put up an oil jetty and storage terminals on 30 acres of land in Bugiri district, completing a grand plan of a new petroleum transport system on Lake Victoria.
Across the border, neighbouring Kenya plans to concentrate on building a number of oil jetties on the shores of some of its key ports such as Kisumu as East Africa’s largest economy plans to increase petroleum supplies to mostly landlocked Uganda and Rwanda.
Mahathi was expected to undertake its ground-breaking ceremony on May 8, while Kenya Pipeline Company is set to launch the construction of its $10 million jetty at Kisumu in June.
The two events are related and are bound to create more room for Uganda and Kenya to exploit the potential that Lake Victoria offers in terms of transporting petroleum products, a slight shift from the rickety road network, where fuel tankers have competed with other vehicles, motorbikes and animals such as cows and goats, over longer distances, for the narrow space.
During the recent joint oil and gas convention and logistics expo at Kampala Serena hotel, Kalyan Swaroop, a director at Mahathi, said the new transportation network it intends to put in place will nearly halve the costs that trans- porters incur.
“We estimate the costs of transporting petroleum products to drop by between 40 per cent and 50 per cent,” he said. “Kenya Pipeline Company will launch a pier at Kisumu and they will partner with Mahathi.”
John Ngumi, the chairman of Kenya Pipeline Company, during the same oil and gas convention and logistics expo, said: “We are now concentrating on the jetties. Uganda and Rwanda are important markets for us.”
The demand for petroleum supplies favours Mahathi. According to its figures, demand for petroleum products in Uganda is 1.6 million tonnes per year. With total petroleum consumption growing by seven per cent per year, the figure is estimated to hit three million tonnes by 2020. And that is just for Uganda. At least 600,000 tonnes of petroleum supplies pass through Uganda to South Sudan and DR Congo.
Already, Mahathi has signed a 10-year exclusive right over the transportation of petroleum supplies between Kampala and Mwanza.
SHELVED PIPELINES
In pushing for more transportation of petroleum supplies across Lake Victoria, some plans of building petroleum pipelines are bound to be shelved. Swaroop said the new petroleum transportation system that Mahathi intends to put in place means Uganda and Kenya do not have to strain over constructing a petroleum pipeline from Eldoret.
For more than 10 years, Uganda and Kenya have mooted the idea of constructing a petroleum pipeline between Eldoret and Kampala. Those plans were nearly complete when Libya’s Tamoil East Africa won the bid for the project.
However, delays in agreeing the final investment decision and the overthrow of the Muammar Gadaffi regime in Tripoli in 2011 saw Tamoil’s plan spiral into turmoil after the Uganda and Kenya governments cancelled its contract.
The Eldoret-Kampala petroleum pipeline, however, was back on the table in 2014 when Rwanda added Kigali to the equation as part of the regional northern corridor projects. A new plan was launched to have a petroleum pipeline built from Eldoret through Kampala up to Kigali.
A London engineering firm, Penspen, was awarded the contract to carry out a feasibility study for the pipeline. However, things have been quiet with very little development in getting a contractor for the pipeline.
Mahathi hopes things stay just as quiet. A petroleum pipeline is bound to erode the profit margins it is targeting. Mahathi has, however, received a short sigh of relief after Kenya Pipeline Company’s Ngumi announced that Kenya had dropped plans of building a pipeline to Busia and decided to concentrate on putting up jetties.
Both Mahathi and Kenya Pipeline Company say pipelines have the risk of being tampered with, especially during pilferage. However, moving more refined petroleum volumes over Lake Victoria, a crucial fresh water source, which is shared by three countries, and where thousands of people use it to fish or draw water, is bound to place environmentalists on alert.
It will be crucial that the new petroleum transport system meets environmental standards. The involvement of Uganda in improving water transport could be an indicator that environment issues are being considered.
The government, in January, called for tenders for a study to assess the potential of a petroleum transport system over Lake Victoria. Uganda has noted in an earlier budget framework paper that it is keen to develop ports around Lake Victoria in order to open up the southern route to Tanzania.
The European Union is already supporting marine transport on Lake Victoria by rehabilitating three to six ports be- tween Kenya, Tanzania and Uganda on Lake Victoria to a tune of 122.6 million euros. Much of the work will go towards improving the capacity of the ports to handle larger volumes.
And yet, all these plans will take a new dimension when the rail services, especially the standard gauge railway between Kenya and Rwanda, come into play.
That, however, might not be an issue for at least five years as Uganda is yet to start building its part of the rail.
Credit: Jeff Mbanga / http://observer.ug
