The International Finance Corporation (IFC), a lending arm of the World Bank, has pledged US$ 600m to fund an oil pipeline in East Africa. The funding is part of a US$1.8bn loan for projects in the Horn of Africa.
The oil pipeline is expected to link up upstream operations in Kenya, Uganda and South Sudan. A statement by the bank indicates that the investments will aid expansion of agribusiness, processing and seeds.
The whole project has been estimated to cost US$5bn. The current pipeline in Kenya reaches Eldoret where a new 350 kilometre pipeline will be constructed at a cost of US$302m up to Kampala, Uganda. Another 434 kilometre pipeline will then be built from Kampala to Kigali, Rwanda.
The move to construct the oil pipeline is aimed at enabling crude exports in the region and boosting its oil industry. It will also end the dependence of South Sudan on Sudan for its oil exports. A tender for the new pipeline was advertised last month, calling for both international and local experience, but the contractor is yet to be selected.
The development of the pipeline is welcomed in the region especially after Kenya and Uganda discovered commercially viable oil deposits. The pipeline will eradicate the current tanker transportation need and subsequently reduce the price of oil for consumers.
Chatham House, a source of independent analysis, indicates in a report, that the region has an opportunity to use the new found oil and gas resources to enhance regional development and integration. Leaders are thus urged to show vision and foresight, in using these resources to enhance regional infrastructure, to reduce poverty and invest in education, and create diversified, globally competitive economies.
Earlier in May this year, the government had said that Kenya’s pipeline would be extended to Uganda and South Sudan. In June last year, Kenya, Uganda and Rwanda had agreed on a strategy to fund oil pipeline construction linking themselves for regional co-operation motives.