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Museveni, Kenyatta Seal Historic Deal on Oil Pipeline, Refinery

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Museveni and Kenyatta inspecting a guard of honour in Kampala on August 10, 2015 (Photo: Kenneth Kazibwe/ChimpReports)
Museveni and Kenyatta inspecting a guard of honour in Kampala on August 10, 2015 (Photo: Kenneth Kazibwe/ChimpReports)

    By: Dickens H Okello

  • Aug 10,2015
  • 1882 Viewed

President Museveni has reiterated Uganda’s position to develop her oil refinery, noting that a protracted engagement with the industry on the importance of an oil refinery for Uganda had delayed commercialization of the country’s petroleum resources.

This was contained in a joint communique issued Monday by Presidents Museveni and his Kenyan counterpart Uhuru Kenyatta at State House Entebbe following meetings aimed at boosting trade and expediting regional integration.

Government in February announced RT Global Resources (Russia) led consortium as the winner of the $2.5bn oil refinery contract.

Upon execution of the different project contracts, the lead investor and government will constitute a refinery company that will take forward the engineering and finalise the financing aspects for the development of the refinery.

The project involves development of a refinery with a capacity of 60,000 BPD, development of crude oil and product storage facilities on site as well as a 205 – kilometre pipeline to a terminal near the capital city Kampala. The first phase of the refinery is expected to be in place in 2008.

Global oil prices dropped sharply over the past seven months, leading to significant revenue shortfalls in many oil-reliant nations.

From 2010 until mid-2014, world oil prices had been fairly stable, at around $110 a barrel. But since June prices have dropped to as low as $48 a barrel.

President Museveni and Kenyatta today spoke on the development of a crude oil export pipeline.

The two Heads of State noted that oil in Uganda was discovered 9 years ago and therefore development of a crude oil export pipeline “needed to be implemented expeditiously to avoid any further delay in commercializing the petroleum resources.”

On the refined products pipeline from Mombasa via Eldoret to Kampala, the Heads of State agreed to develop a “reverse flow petroleum product pipeline capable of transporting imported petroleum products to Uganda and also from the refinery in Uganda to Kenya.”

Museveni had taken a harsh stance against exporting crude oil until he was warned that delays in commercial production would bear serious consequences for the economy as oil prices continued to drop.

President Museveni expressed his government’s desire to develop the least cost route to transport her oil to the East African coast.

In this regard, the two Heads of State agreed on the use of the Northern Route i.e. Hoima-Lokichar-Lamu for the development of crude oil pipeline.

This was subject to the Government of Kenya guaranteeing security on the Kenya side of the pipeline; financing of the Project; transit fees/tariffs in any case not higher than would be payable on an alternative route and implementation of the Project without further delay.

Kenyatta has been in Uganda since August 8 where he has held a series of bilateral talks with President Museveni.

They expressed satisfaction at the strong bilateral relations existing between the two countries and reiterated their commitment to enhance further these relations.

Exports

President Museveni noted that Kenyan exports to Uganda are estimated at USD 700 million compared to imports worth USD 180 million, and commended President Kenyatta for implementing initiatives that would contribute to bridging the trade gap.

The two Heads of State observed that bilateral trade has potential to grow further and reaffirmed their commitment to the free movement of goods, labour and services, including the elimination of all trade barriers.

Museveni and Kenyatta welcomed the establishment of the Uganda-Kenya Joint Ministerial Commission as an important framework for deepening and expanding bilateral cooperation to a higher and more comprehensive level.

At the instruction of the two Heads of State, the delegations met at Ministerial level and decided to concretize agreed areas within the framework of the Joint Ministerial Commission.

Integration

The two leaders agreed that regional integration is “key to shared prosperity, expressed their deep commitment to integration of the East African Community and reaffirmed their support towards realization of the East African Political Federation.”

They further exchanged views on the political and security developments in the region.

In this regard, they reaffirmed their commitment to continue working together with the respective Governments and other stakeholders in resolving outstanding challenges in Somalia, South Sudan and Burundi.

Al Shabaab continue to terrorise the people of Somalia while war in South Sudan has left an unprecedented trail of bloodshed and destruction.

In Burundi, President Pierre Nkurunziza’s decision to hold onto power has since plunged the nation into turmoil.

According to the communique, Museveni and Kenyatta expressed their concern on the continuing peace and security challenges in the region, particularly the emergence of extremism and terrorism.

They agreed to intensify joint efforts to counter terrorism.

Meanwhile, during his visit, President Uhuru Kenyatta toured CIPLA Quality Chemical Industries, a Pharmaceutical plant located in Kampala manufacturing Anti-Retrovirals (ARVs) and Anti-Malarial drugs.

He applauded the state of the art facility being run by Ugandan professionals and reiterated the desire to support important industries such as CIPLA which are located in the region and to be treated as domestic industries for purposes of procurement.

President Kenyatta addressed a Business Forum which was attended by the private sector from the two countries, encouraging the use of Forums to strengthen economic cooperation through establishing networks and partnerships to stimulate innovation and competitiveness in businesses.

President Kenyatta also witnessed the signing of a Memorandum of Understanding between the Uganda National Chamber of Commerce and Industry (UNCCI) and the Kenya National Chamber of Commerce and Industry (KNCCI) to promote common interests

On the third day of his visit His Excellency President Uhuru Kenyatta made a historic address to the Parliament of Uganda where he stressed the need to deepen East African integration and urged East Africans to work together for shared prosperity

President Museveni expressed his appreciation particularly to Kenya and other nations that supported Uganda to overcome her past challenges.

President Kenyatta expressed his appreciation to the Government and the People of the Republic of Uganda for the warm welcome and hospitality which was accorded to him and his delegation before inviting Museveni to visit Kenya on a date to be mutually determined through diplomatic channels.

Museveni welcomed the invitation.

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