The Kenyan government is now mounting pressure on the contractor of the Uganda Lake Victoria offloading oil pier due to delay in completing the project which is causing losses on Kisumu loading pier that was completed in 2018.
Kenya now wants Indian group Mahathi, which is building Uganda’s jetty to pay some $22.8m, Africa Intelligence, a continental’s news platform reported this week. Slow pace in constructing the Uganda oil jetty is frustrating Kenya’s effort to relaunch Kisumu oil jetty. Sh 2 billion of taxpayer’s money was sunk in the project.
“The Kenyan oil jetty was completed and is ready for use but unfortunately our counter partners on the other side of the lake, which is Uganda, are not ready,” said the Kenya Pipeline Corporation (KPC) managing director, Dr Macharia Irungu, in a presentation to the Senate Standing Committee on Energy last year.
Kisumu jetty is designed to facilitate easy transportation of petroleum products to Uganda, Rwanda, Burundi, South Sudan and parts of the Democratic Republic of Congo.
KPC has two major facilities in the Western region–the Eldoret depot and Kisumu depot with storage capacities of 48 million litres and 45 million litres respectively.
In December last year, Auditor General Nancy Gathugu said KPC will need to cut the value of the jetty in its books, arguing that it may not find use in coming months.
KPC is losing millions of shillings in potential revenue due to the delayed construction of the Uganda facility.
“Further delay in operationalisation of the project may require the Kisumu Jetty assets to be assessed for impairment of their book values,” said Ms Gathungu.
“Although the management have indicated that some progress has been made in construction of one of the two planned similar jetties in Uganda, there is no certainty when these will be completed and operationalised. Therefore, the country is not deriving any value from the use of the jetty.”
Uganda remains Kenya’s top export market with 70 per cent of imported oil products. The Kisumu Port refurbishment is a multimodal regional gateway that has been neglected for decades as transporters shifted to use of the road.
Kenya Railways has refurbished the MV Uhuru, a vessel that is being used for transportation of goods between the Kisumu Port and Uganda harbour of Port Bell.
Initially, the company had attributed the delays to challenges of securing funding but that has now been resolved with Equity Bank, which is among the key financiers of the project, providing $70 million.
The total installed capacity of the 14 tanks is 70 million litres, way much more than the Kisumu and Eldoret depots combined, and the jetty is designed to enable seamless availability of petroleum products to neighbouring countries.
When complete, Uganda will for instance have a massive supply headroom considering the country’s consumption is 4.5 million litres per day.
The completion of Uganda’s jetty is crucial to the commercial viability of the Kenyan project, since Kampala is the major recipient of Kenya’s oil products, accounting for about 70 per cent of all exports.
The Lake Victoria port network also includes Mwanza, Musoma, and Bukoba in Tanzania and Entebbe and Port Bell in Uganda.
KPC expects to ride on both the port and jetty to increase it exports to regional markets, where it has lost about 30 per cent of its business to Tanzania, which exports through the central corridor.
