Kenya Seeking $3b in US Financing for Oil Pipeline

Kenya Seeking $3b in US Financing for Oil Pipeline
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Kenya is seeking $3b in US financing from the $31b Power Africa Fund to support the construction of a crude oil pipeline from Hoima, Uganda to Mombasa, The Star reports. Newly-appointed Cabinet Secretary, Charles Keter, said that the US supported the plan. Kenya believes the project will be key to developing the fields being explored in Northern Kenya and the Lake Albert Basin in Uganda.

The pipeline will extend for about 1500 km from Hoima through Lokichar to the proposed Lamu Port and is expected to cost Kenya approximately $3b (Sh306.99 billion). According to Keter, a detailed feasibility study for the project has been completed and negotiations are ongoing between Kenya and the US to determine implementation.

Britain’s Tullow Oil, which discovered oil deposits in Kenya in 2012, estimates that the country has about 600m barrels of oil reserves, but commercial production may not be possible until 2020 due to depressed oil prices and lack of infrastructure. Keter remains optimistic that US-funding can help make the discoveries a reality: “We can tap it. The Power Africa project allows all the beneficiary countries in the sub-Saharan Africa region to use the fund to invest in energy projects.”

The US-backed Power Africa project began in 2013 with the goal of catalyzing energy investment in Ethiopia, Ghana, Kenya, Liberia, Nigeria, Tanzania, Uganda, and Mozambique. Lack of infrastructure is one of the major challenges in developing these fields, key to larger economic development in Africa.

Despite the discovery, plans and sources of funding, complications remain. Total, an equal partner with Tullow and China National Offshore Oil Company in Uganda’s oil exploration sector, disagrees with the pipeline construction plans on the Kenyan route, arguing the current plan is more expensive and challenging to implement than another proposal to build the pipeline between Hoima and the Tanga port in Tanzania.


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