Reports Leo Odera Omolo
REPORTS appearing in local newspapers in both Kenya and Uganda have hinted that Libyan interests in East Africa, which were brokered by the toppled and slain former Strongman Muamaor El Gadhafi continue to shrink as it emerges that Kenya, will be pressing for complete disengagement with the Tripoli’s business flagship Tamoil East Africa Ltd.
A crucial meeting is scheduled to be held in the Ugandan capital, Kampala later this weekend to review the propose Eldoret-Kampala pipeline.
Top industry players and Energy Ministry officials are reportedly wants the multimillion-dollar deal – the largest surviving project by a Libyan company in East Africa- terminated and the project floated afresh to attract new partners.
Launched in 2007,the project has suffered crippling delays, compounded by the insurrection that precipitated last year’s toppling of long-ruling dictator Colonel Muammor El Gadhafi.
Kenyan most influential weekly, the EASTAFRICAN, reported early this week that lately, Libya had launched a major diplomatic offensive, hoping to persuade authorities in Kenya and Uganda to revive the deal, claiming that Tamoil had already spent USD 15 million.
It is understood that the joint co-coordinating committee that has been overseeing the contract on behalf of the two governments is not persuaded by the claim by h Libyan that Tamoil has spent such a large amount of money on the project.
“Doubts have also emerged as to whether Tamoil – which is said to have suffered the loss of billions of dollars in assets due to persistent bombing by NATO forces during the insurrection-still, has the wherewithal to undertake this critical project, especially after Uganda reportedly demanded that the scope of the project be altered to cater for n additional line to pump future refined Ugandan oil to export markets through Kenya.” the paper says.
So far, the project has not moved beyond even the first stages following the signing of the agreement in January 2007
It was originally projected that Libyans would achieve financial closure in July 2007. However, closure was not achieved; the time lines have had to be extended several times with the project stagnating at the heads of agreement level for months.
Still, a great deal of preparatory work was done, including the signing of a formal agreement. An environmental Impact Assessment was also done and licenses fro NEMA, Kenya and NEMA
Uganda issued in 2008.
The NEMA Kenya license, which was valid for a 24 –month period expired on July 6,2010. And In May,Tamoil, submitted designs for a 10-inch diameter pipeline that were approved by the JCC in June 2008.
When Uganda, following discovery of significant quantities of oil and having decided to build an inland refinery insisted on a reverse flow pipeline, Tamoil presented other designs of a 12-inch diameter reverse flow pipeline recommending construction of a 12-inch diameter reverse flow pipeline.
By the beginning o this year, the way leave acquisition process, which was being undertaken by the governments in collaboration with Tamoil had been substantially completed.
In Kenya, the Ministry of Lands released the compensation schedules for parcels of land along the way leave of the pipeline. The submitted schedule contained about 2,107 formally and informally subdivided plots with n estimated total compensation cost of Kshs 520 million {USD6.27 million].The compensation details for 191 affected plots were, however, found to be missing from the report and the Minister was directed to complete the work.
Under the arrangement, the Kenya and Uganda governments were to acquire the way leave and other land rights as part of their equity injection in the joint venture company.
Payments to land owners whose compensation schedules have been released have not been done.
At a meting of the JCC in October 2010,it was agreed that the Libyan provide finance to pay of landowners.
The JCC also decided that the two governments would postpone any equity injection until after the Libyan had produced the money to fund land acquisition.
The shareholding by the two governments would be equivalent to the equity injection that would have been made at commissioning of the project up to 12.5 per cent for each government as per heads of agreement. As at now, the report went on, acquisition of land for permanent installation such as block valves station and pumping stations is still outstanding.
Kenya-Uganda pipeline extension project is jointly sponsored by the government of Kenya, through the Ministry of Energy and the government of Uganda through the Ministry of Energy and Mineral Development.
The joint coordinating commission was set up through a memorandum, of understanding between the two governments in 1995 initially to oversee the feasibility study.
But the mandate of the JCC was expanded in October 2000 to allow the commission to oversee the implementation of the project. A feasibility study was done in 1999 by a firm called Penspen Limited, and complementary study was done two years later by Nexant Ltd. Both studies established that the uni-directional pipeline from Eldoret to Kampala was commercially viable.
The JCC considered and adopted the final report by Nexant Ltd and the two governments approved the construction of the pipeline as a public-private partnership.
Following international competitive bidding, the Libyan company was selected as the private- -partner, paving the way for the parties to sign the heads of agreement in January 2007.
However, the recent reported discovering of large quantities of oil deposits in the Northern Kenya County of Turkana could possibly change the speed of the work implementation and slacken the project.
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