Toyota says Sh385bn Kenya-Uganda pipeline feasible

Work on the Mombasa-Nairobi oil pipeline.
Workers lay down a pipeline. Kenya forecasts that its oil reserves will be monetised by 2018. PHOTO/FILE
Toyota Tsusho, the trading arm of the Japanese car maker, has said that the $4 billion (Sh385 billion) Uganda-Kenya pipeline, meant to connect the region’s crude oil to Lamu for export, is economically feasible.

This follows the completion of a feasibility and preliminary engineering design study for the 1,300-km crude oil pipeline that runs from Hoima in Uganda through the Lokichar basin in north west Kenya to Lamu.

Toyota Tsusho, which won the tender in October, will also be required to supervise the installation of a fibre optic cable from Hoima through Lokichar to Lamu, and tank terminals in Hoima, Lokichar and Lamu.

The project will also involve the construction of a 9-km pipeline from the Lamu tank terminal to a loading buoy anchored offshore.

Kenya’s principal secretary for Energy Joseph Njoroge said on Thursday that the government will invite bids for construction of the pipeline later in the year, with the project scheduled to commence next year.

“Feasibility studies for a crude oil pipeline running from Hoima in Uganda through Lokichar to Lamu have been completed. Request for proposals for the construction of the pipeline will be issued by third and fourth quarter,” Mr Njoroge told journalists in Nairobi on Thursday.

Kenya puts the estimated crude oil recoverable reserves at about 1 billion barrels from the Rift Valley Basin, while Uganda estimates its crude reserves at 6.5 billion barrels.

“It is expected that the oil reserves can be monetised by 2018,” said Mr Njoroge.

ALSO READ: Toyota Tsusho to lay 2,000km Kenya-South Sudan oil pipeline

The pipeline will be built under a public private partnership framework since the regional governments alone cannot finance the ambitious project.

The initial phase of the project will involve construction of a 864km crude pipeline from Lamu to the oil fields in Lokichar – with the flow of first oil expected by end of 2018, according to the director general of the Lamu Port South Sudan Ethiopia (Lapsset) Corridor Development Authority Sylvester Kasuku .

The pipeline is part of the Lapsset project that includes construction of a new Lamu port, railway line, highway, airport and an oil refinery at a cost of Sh2.7 trillion.

EDITOR'S NOTE: Read the latest issue of Construction Business Review. Flip through the pages of the paper real-time or download a copy to read offline. Sign up for a FREE subscription to get the paper delivered to your inbox every month.