{UAH} Standard Digital News - Why Uganda-Dar pipeline deal is a wake-up call for Kenya

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.

http://www.standardmedia.co.ke/mobile/article/2000194590/why-uganda-dar-pipeline-deal-is-a-wake-up-call-for-kenya

Sincerely,

Brian M. Kwesiga