There is certain movements that will strike as more expensive for the East African Community (EAC). This being for the Government of Uganda (GoU) and the Government of Kenya (GoK), who has big plans of petroleum pipelines from their oil-fields and to the coast. That being from Turkana to Lamu Port. While the Ugandan oil goes from Hoima to Tanga Port in Tanzania. Both development and industrial projects will have issues with the funding. The World Bank has supported massive infrastructure projects in both countries.
Therefore, for the two counties big development and oil industry, this is giant set-back, since they have to find funding and loans for the pipelines on the open market. Even with higher interests and making the profits of it lesser, than it would have been with a World Bank loan. It would not hurt the pocket as much as it does on the open market. The banks wants more profits themselves and also make sure they are paid-in-full.
With all this in mind. There are speculations, but first. Parts of the self-answering service. Before we look at the reactions in Kenya and Uganda. All of are important, as the state is involved in the licensing and building the pipelines. They are directly into the development and procurement of the pipelines. That is why this is big blow for the administrations and their possible tax-profits on it.
Word Bank Q&A:
“Q. How is “upstream” oil and gas defined?
Upstream is an industry term that refers to exploration of oil and natural gas fields, as well as drilling and operating wells to produce oil and natural gas” (World Bank, 2017).
“Current projects in our portfolio would continue as planned. However, no new investments in upstream oil and gas would be undertaken after 2019, unless under exceptional circumstances as noted in the decision” (World Bank, 2017).
“The announcement by the bank, which has significant interests in Kenya’s oil prospecting sector, does not bode well for the country’s anticipated entry into the club of oil producing nations beginning next year. Analysts said they do not expect an immediate reaction to the announcement even as they acknowledged that it takes the shine from oil in the long term” (…) “Locally, the World Bank is offering technical support to the Kenyan government, through the Kenya Petroleum Technical Assistance Project, to prime all stakeholders for commercial oil production and sale. The six-year programme is scheduled to run until February 2021 and involves the World Bank managing a Sh5.2 billion fund set up by investors from Germany, Norway and Britain. The World Bank’s private lending arm, International Finance Corporation, is however directly involved in Kenya’s oil fields, having a 6.83 per cent stake in Africa Oil, the Canadian exploration firm with interests in northern Kenya oil blocks” (Mutegi, 2017)
“The pipeline, is expected to be completed by the year 2020, when the country is scheduled to start oil production. In fact, Uganda’s President, Yoweri Museveni and his Tanzanian counterpart recently commissioned the construction of the East African Crude Oil Pipeline. The two leaders laid mark stones for the crude oil pipeline in Mutukula, Kyotera district and Kabaale in Hoima district. Total E&P Uganda, a subsidiary of French oil giant, Total S.A, is spearheading the construction of the crude oil pipeline on behalf of the joint venture partners. Adewale Fayemi, the general manager, Total E&P Uganda says discussions are ongoing to discuss on the formalities of how the pipeline will be run. Already, an agreement has been reached that the East African Crude Oil Pipeline (EACOP) will be run and managed by a Special Purpose Vehicle (SPV) – private pipeline company. This means that a private company will be incorporated with joint venture partners – Tullow Uganda, Cnooc Uganda Ltd and Total E&P Uganda, and the governments of Uganda and Tanzania as shareholders in the company” (Ssekika, 2017)
Certainly, this will put a strain on the projects. They have to deliver another type of arrangement to make sure they get funding and have the funds to pay the added interests the banks wants. The added points on the dollar and the interest-rates will hit state-owned firms and the state itself. Since the pipelines most likely becomes more expensive and will be less profitable.
That the World Bank is pulling out of these projects is all within line of the Paris Accord, as they have professed is the reason. Still, this will make these projects more expensive and make sure they are earning less on it. Unless, the crude-oil prices are going up to a level that makes these investments even more profitable. That is only for time to tell. Since it is costly projects and also sophisticated to build. There is needed lots of expertise combined state planning to achieve the development plans.
This is just the beginning, but the pipelines and these investments are vital for both Kenya and Uganda. As the governments are already borrowing state funds on the possible earnings from the oil reserves in their basins. Therefore, they need to drill and need the petrodollar as quickly as possible. Peace.
Mutegi, Mugambi – ‘World Bank dims Turkana oil hopes’ (14.12.2017) link: http://www.nation.co.ke/business/World-Bank-dims-Turkana-oil-hopes/996-4227848-u02v8n/index.html
Ssekika, Edward – ‘East African Crude Oil Pipeline: The Inside Story’ (11.12.2017) link: http://www.oilinuganda.org/features/economy/east-african-crude-oil-pipeline-the-inside-story-details-emerge-of-how-the-crude-oil-pipeline-will-be-financed-managed.html
World Bank – ‘Q&A: The World Bank Group and Upstream Oil and Gas’ (12.12.2017) link: http://www.worldbank.org/en/topic/climatechange/brief/qa-the-world-bank-group-and-upstream-oil-and-gas
The tides are turning and the continuation of the matter on who gets the crude-oil pipeline through their countries from Hoima down the coast. The Ugandan delegates to Tanzania were treated as royalties as the delegation could bring tax-money and development for the Tanzanian government. While the Kenyan could take that away and they could see either their advantage or disadvantage towards the Port system of Tanga. That might be why CS Keter lost his passport and travel papers on Wednesday in Port of Tanga.
The only ones earning on this diplomatic matter is Ugandan, but the East African Community is creating a hostile environment between countries over a pipeline and the gaining the monies involved in the deal, the rates and construction of the pipeline.
What was said the day after the Passport and Travel Papers of CS Keter taken at Tanga Port:
“According to a source in the Presidency, Foreign Affairs Cabinet Secretary Amina Mohamed has tasked Kenya’s envoy to Tanzania Ali Chirau Mwakwere with getting to the bottom of the matter. “We want them to tell us what wrong they did as per the East African Protocol.” (…)“The two leaders agreed to meet after two weeks in Kampala to allow their technical officials to harmonise their presentations, focusing on: ensuring a least-cost option for a regional integrated pipeline, address constructability issues along all routes – existing and planned infrastructure, terrain and elevations. Assessing and confirming the current proven reserves which will have an impact on the size of the pipeline,” Keter and his Ugandan counterpart Irene Muloni jointly stated on March 21 following the State House meeting” (…)”It is in the process of assessing the, “viability of the Lamu, Mombasa and Tanga ports,” that Keter and the rest of his delegation encountered hostility”.
What is said today on the matter:
“State House Spokesman Manoah Esipisu told reporters in Nairobi that Tanzania was isolated deliberately because it had nothing to do with the issues on the agenda. “Monday meeting was bilateral. As you know we had also invited oil companies but they did not participate in the bilateral meeting,” he told journalists” (…)”Diplomatic sources said Kenya was planning to protest the apparent violation of the East African Community laws on free movement of people, even though Tanzania has argued it had no prior information the officials would be travelling to Tanga” (…)”As Mr Keter and his group were being barred from the Port, the Ugandan delegation led by Irene Muloni, the Energy Minister, were being shown a presentation on the advantages of routing the pipeline through Tanzania” (Mutambo, 2016).
More on the matter today:
“A senior State House official who did not want to be named because the matter was being handled at the Foreign Affairs ministry said the incident was “unfortunate” and that Kenya would protest to the Tanzanian government through its high commissioner in Dar es salaam. “I can confirm to you that the matter will be handled through our Foreign Affairs ministry. The incident was embarrassing,” the official said. He said the Tanzanian government was aware of the planned trip, which was part of an assessment of the three ports of Lamu, Mombasa and Tanga to check the suitability of the ports for Ugandan petroleum” (Kajilwa & Ng’etich, 2016),
It is hard to know what this can lead to, at least the Tanzanian diplomatic sources saying it was embarrassing to them, and to get knowledge of the Port Police actions in the Port of Tanga. When the Tanzanian Government person inside their State House says so, then their suddenly was not maliciously intent towards the Kenyan officials and diplomatic team on their soil. Though it will put a strain to the matter, as the actions speaks louder than words and to what extent certain people goes towards the advisories.
The Kenyan are right to ask for a sincere apology and reasoning for the hold-up, the passport and travel documents from the CS Keter and his team, while letting Ugandan Energy Minister Muloni walk around like proud-cock at the Port of Tanga.
This here is proof of the matter and how the governments are handling the matter and approaching each other. The Tanzanian Government should issue an sincere apology and the Kenyan should comply in a peaceful manner, as that is what they have asked for. Since this a big deal for both countries, as I have described again, and would be a long-term economic development project that would benefit more sectors than just the oil. Therefore we can see the growing rift for getting through their country and down to their port. I hope that Tanzanian government have sense and the same from the CS Keter as he was the victim, and have already gotten leverage, but that does not mean it gives a free-pass to the minister of Kenya. This will be something that will continue, into the final agreement between Uganda and the picked destination and the contracts between the Oil-Companies who will be drilling the oil in Lake Albert and the Albertine Region. Peace.
Burrows, Olive – ‘Kenya: Govt Protests to Tanzania Over Keter Passport Fiasco’ (24.03.2016) link: http://allafrica.com/stories/201603250043.html
Kajilwa, Graham & Ng’etich, Jacob – ‘Kenya protests to Tanzania over confiscation of Charles Keter’s passport’ (25.03.2016) link:http://www.standardmedia.co.ke/article/2000196026/kenya-protests-mistreatment-by-tanzania
Mutambo, Aggrey – ‘State explains why Tanzania was excluded from oil pipeline talks’ (25.03.2016) link: http://www.nation.co.ke/news/State-explains-why-Tanzania-was-excluded-from-oil-pipeline-talks/-/1056/3132806/-/52cqfg/-/index.html
This is like out of a spy-novel. A novel that clearly is full of twists and turns as agreements and officials move back-and-fourth. Here is the first statement on the matter that has moved further from talks between the Kenyan and Ugandan Officials. Here it is:
“Tanzania authorities confiscated the passports of top Kenyan officials, including Energy CS Charles Keter, and denied them access to the port of Tanga but allowed a Ugandan delegation to proceed with the tour unmolested. The trip was part of their mission to unlock a deadlock between Kenya and Uganda over whether a proposed oil pipeline to export Uganda’s oil would pass through Kenya or Tanzania” (The Kericho Renaissance Network, 2016).
As one wrote:
“The Kenyan team had travelled to Tanga together with a Ugandan delegation involved in the crude oil pipeline discussions. The Ugandans were received very well while the Kenyan team was mistreated by the Tanzanian authorities” (Pauline Njorge, 2016).
This here is certainly a reaction to the proposed deal that was supposed to already be set between the Ugandan and Tanzanian during the 2015. Here is all of sudden reactions from the Tanzanian over the sudden change of guards and that the Ugandan Government does not fully turn to them. As the Agreement of last October was to be done and soon resume building in between the nations.
This here is certainly a blow on diplomatic matters and the distrust between Kenyan and Tanzanian diplomats, also the way “foreign” nationals seen as trespassing and henceforth detained, even prematurely and without “charge” is an insult between the Tanzanian Government and Police towards the Kenyan counterparts. It would been an insult if the Kenyan National Police was to detain a Tanzanian minister or official crossing over to Mombasa or any other port to look at the different scenario. Instead of honoring the fellow brother from another country in peaceful times; as the Kenyan and Tanzanian government does not have grudges or ill-feeling towards each other!
If this is the start of diplomatic struggles between Tanzania and Kenya, that might be true as this is visible attack on movement of foreign diplomatic officials and high-government officials, something the Police of Tanga Port have had to know since they released them quickly.
But the economic implications of a crude-oil pipeline is big for any country, first the economic benefit of jobs as it was estimated in Tanzania to employ 100k during the year to build the pipeline, also the rates for transporting the oil to the sea will bring steady revenue, something Tanzania is not wanting to miss out, neither does Kenya who wants the same, and both Kenya and Tanzania wants to be the economic and the powerhouse of East Africa. The deal of the crude-oil pipeline can generate lots of income and be a gentle push for more steady revenue, as tourism and exports are not crystal clear and always giving steady cash to the countries, as the coffee and tea prices are going up-and-down.
The matters remain and is in the hand of the Ugandans, as they are trying to find the suitors who fit their price and timelines, so they can benefit the most and will use all the tools and diplomatic leverage to gain the best contract and facilitation and neither Tanzania or Kenya want to be the one left behind. Peace.
There is the time and day where the President Museveni walks into Tanzania speaks to the new President Magefuli and promise more money for sustainable pipeline through Tanzania down to the coast. Later in the month he travels to Nairobi and meet President Kenyatta, and promises to ship the oil in pipelines through Kenya down to the Coast.
As both Big-Men do their bidding and promises quality lines in safe pastures with clean operations and good relationship between the countries and their businesses. While Tanzania was first in this time around, the Kenyan counterparts would not be worse.
The Ugandan Government have gone back-and-fourth promised Kenyan government before and made plans fitting the Kenyan perspective, so early in March after the general Election, the President met with President Magufuli seemed to be a grand deal, as the Tanzanian said they could start with building as early as August 2016 if the Ugandan Gov. was ready for it.
Now today it seemed as the Ugandan government have gone away from the Tanzanian agreement from early in month. As the Bunyoro oil fields will build pipelines from there down to Kenyan coast. A gentleman’s agreement between Uhuru and Yoweri, as they have worked together during election time, with funds and that President Museveni wants to give something back and show loyalty to the Kenyan President.
Tanzania and Uganda had even signed a framework agreement for the crude pipeline on the 12th of October in 2015. That seemed just to be a plan and not official document as the President of Uganda, seem now to be keen to repay his fellow mate in Kenya.
We never know is if this an reaction the EAC Inter-Burundian Dialogue of Peace between the Burundian stakeholders where President Museveni has lost his position as the opposition in Burundi claimed he was biased towards President Nkurunziza and wanted somebody else, as the African Union and EAC let former Tanzanian President Mpaka take the key role, as the mediation will be led by him, not the Ugandan President. That must sting a bit to man who wants to be the grand King of East Africa and overrule all estates and areas at all cost. That might be why they scrapped the agreement with Tanzania when it comes to the Pipeline.
This here will be proof of who wants to be the cadre for the monies that Ugandan President could bring and how far they will go to eat from his hands. As the President plays the field on both home-grounds and hope to gain the most for himself for as little as possible, while serving loyalty to the ones he picks. The partly agreement that was written during last quarter of 2015 seems too premature, as the joint statement today assume that the Kenyan government takes the last straw. Especially with the knowledge of the funding of President Museveni campaign parts of those funds to his war-chest came from the mountains of Kenya and not from Tanzania.
Because a man like President Museveni is more about his own will than the best for the oil or the best for the companies involved, because he want to be sure that the decision is benefitting him and his loyal cadres. Not anybody else, therefore he plays with Tanzanian and Kenyan officials until he gets the best deal for him, even if that strands the already made agreement with Tanzania, as the Kenyan suitors want to make sure that he gets the sugar and the tea he needs to sign a joint deal with them, even keep the Migingo island, as the money from pipeline can bring wealth and create jobs in Kenya, more than a few fishes and stones in the middle of lake. Peace.
Here I will Travers through the report of Auditor General of Uganda’s Annual Report for the year ended 30th June 2015. This is on: “CENTRAL GOVERNMENT AND STATUTORY CORPORATIONS”. I will take the quotes and stories that seem to show parts of how the Government of Uganda works and what the Auditor General have cared about addressing in this specific report. Take a look! This here is Part one!
What it contains:
“This is Volume two of my Annual Report to Parliament and it covers financial audits carried
out on Central Government Ministries, Departments, Agencies, Universities and Uganda
Missions abroad” (…)”Section 2 presents my findings and audit opinion on Government of Uganda Consolidated Financial Statements including major observations” (P: 25).
“Government paid UGX.26.1bn during the period under review as delayed settlements of obligations arising from contracts for construction services, Court awards, and contributions to international organizations etc” (P: 34). Comment: The government has no issues wasting giant sums of settlements it seems, shouldn’t’ there be away to not use the money on these settlements?
Unsustainable pension liability:
“The Ministry of Public Service recorded an outstanding pension and gratuity liability of UGX.199,255,907,539 as at 30/6/2015 (up from UGX.108,681,159,047 as at 30/6/2014). It was noted that the gratuity and pension arrears continue to accumulate, a fact which the Accounting Officer has attributed to inadequate budgetary provisions over the years” (P: 35). Comment: There been press release from the Ministry of Finance, Planning and Economic Development during 2015 doesn’t seem like they want to fix it, instead blame the pensioners. Well, they have learned from their master right?
Understocking of the Government petroleum strategic reserves:
“In 2012, the Government of Uganda and a private petroleum company entered into a concessional agreement to refurbish, restock, maintain and manage the petroleum strategic reserve facility at Jinja. Despite the concession requiring the operator to ensure that 40% (12million litres) of the storage capacity of the products is available at all times, I noted during inspection in September 2015, there was only 274,000 litres of petrol and 331,000 litres of diesel in stock compared to the required stock levels of 20,000,000 and 10,000,000 litres respectively” (P: 38). Comment: Doesn’t seem like they follow the guidelines from 2012 and proves that the Governmental agencies doesn’t follow the plans they have or have the procurement to buy what their supposed to. This here is just barely enough considering the use of oil and diesel!
Construction of Kampala-Entebbe expressway:
“It was observed that the unit cost for the Kampala-Entebbe expressway was US$ 2.315 million per lane kilometre while the similar expressway was US$ 1.204 million per lane kilometer” (…)”This is less than half of the cost of Kampala-Entebbe Expressway which is US$.9.261 million per Km” (…)”However, a review of the services provided by the consultant’s revealed duplication of activities as the originally recruited private firm serves the same purpose as the international firm” (P: 38-39). Comment: This here has been discussed and been put out there, but still proves the misuse of funds, especially when one of the reasons is that you have two companies that have the same role on the site, instead of only one, and that adds the price per kilometer of roads.
Mismanagement of funds under the Ministry of Local Government (MoLG):
“the diverted funds revealed that UGX.3,827,011,454 remained unaccounted for and UGX.635,621,910 was questioned due to inappropriate accountabilities” (P: 39). Comment: Unaccountable use of funds is a beauty and proves that funds have been used without waivers or accounted for; where it has been used is something that we can ask, but they could by Kit-Kat bars in Masindi or extra bottle of cokes in Lira for all we know.
Fixed budget allocation for essential medicines and health supplies:
“The annual budget allocation of UGX.218bn for essential medicines and health supplies to all health facilities across the country has remained constant since 2011/2012 despite the remarkable increase in the number of patients” (P: 42). Comment: That the money are stagnate while the amount of patience goes up shows quickly; why the hospitals doesn’t have the necessary medicine? That is the simple reason why they don’t have enough.
Regional coordination and monitoring framework for Northern Corridor Integration
“For example amounts totalling to UGX4.2bn was disbursed to fund the power interconnection and the Hoima-Lokichar-Lamu oil pipeline. However, the protocols do not provide for regional coordination and monitoring as well as the audit framework to provide an independent assurance on the utilization of joint funds” (P: 43). Comment: Money to a project that don’t have a framework for the regional coordination and can’t utilization of the funds, that means they are just sitting in the fund, without any use or monitoring it.
Compensations of Project Affected Persons (PAPS):
“Review of the compensations for the Project Affected Persons (PAPs) on the two projects of Mukono-Kyetume-Katosi road and LPC Busega revealed inconsistencies in the names of the PAPs appearing in the Chief Government Valuers report and those compensated” (…)”A sum of UGX.1.3 bn paid without resolving the inconsistencies was questionable” (P: 44-45). Comment: That already over-expensive road project that has gone over margin and had issues with the contractors of the road-building. So that the government haven’t compensated the once that lost land where the road where built. Therefore the project is even more expensive, since this will be add-ons to the ones that already registered and billed for.
Budget performance-Budget shortfall:
“21 entities budgeted to receive UGX. 2,272,017,747,273, out of which UGX. 1,481,698,945,173 was received translating into a 65% out-turn for the financial year. This left a funding gap of UGX. 790,318,802,100 (35%)” (P: 55). Comment: This here proves how the budget is underfunding and not procuring from the Ministry of Finance, Planning Economic Development (MoFPED) to deliver the cash in-due time to the projects and other state entities that supposed to get funding to do their work. The ministry with biggest shortfall was the Ministry of Energy and Mineral!
MoFPED – Payment of avoidable interest on VAT:
“It was noted that as of November, 2014, the outstanding VAT obligations for BIDCO stood at UGX.744,420,170, included in this figure was late payment interest charge of UGX.168,747,557. Accordingly, a sum of UGX.700,000,000 was paid to URA towards settlement of the tax arrears” (P: 93). Comment: Bidco got to pay less to cash to URA then expected in a settlement, instead of paying everything they needed as they hadn’t cleared in their VAT. So the government was not getting what they we’re entitled so the company of BIDCO got off cheap.
Payment of the fourth instalment under ADB Subscription:
“It was noted that the payment of Uganda’s 4th instalment of UDS.1,293,299 which became due on 16th March, 2015 had not been made. As a result, the callable shares related to the missed instalment had been suspended in line with the Board of Governors resolution on the sixth general capital increase of the bank meeting” (P: 95). Comment: This here proof that they don’t take the place in the Pan-African Bank institution, only take the loans from African Development Bank, but not taking charge in paying dues to it.
Presidential Initiative on Banana Industrial Development (PIBID):
“It was noted that the PIBID project has been operating without an approved strategic plan. The strategic plan is supposed to guide the budgeting process by creating integrated link with the annual work plans which feed into the budget to ensure effective service delivery and achievement of set project objectives” (…)”During the financial year 2014/2015, the PIBID project had a budget provision of UGX.9bn out of which only UGX.2.7bn was released as vote on account and as a result, activities worth UGX.6,682,145,000 were not under taken. (P: 100- 103). Comment: 6,3bn was not released so that is under the double, but not triple of the ones that has procured to the PIBID.
Department of Ethics and Integrity:
“Directorate’s approved structure/establishment indicated that whereas 60 posts were approved, only 46 had been filled by the year-end leaving 14 vacant” (…)”that withholding tax amounting to UGX.4,662,524 due to URA was not withheld from seven (7) service providers and as such, funds were not remitted. Failure to withhold tax exposes the entity to a risk of penalties and interest charges by URA which may lead to nugatory expenditure” (P: 111-113). Comments: This here proves the defaults on the hiring of people in the department and also mismanage off tax.
This here must been seen as interesting; the report is big, so there is more to come. This here will be series with many pieces as the actions of government is to interesting to NOT be put on blast. Peace.
Office of the Auditor General – The Annual Report for the Year Ended 30th June 2015 – Central Government and Statutory Corporations 30th June 2015.