Opinion: Now that the World Bank has new priorities, they will most likely not loan to the pipelines in East Africa!

 

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).

Kenya Pipeline:

“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)

Uganda Pipeline:

“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.

Reference:

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

EAC: Signing of the Inter-Governmental Agreement between the Republic of Uganda and the United Republic of Tanzania for the East African Crude Oil Pipeline (EACOP) Project (26.05.2017)

Communique between the President of Tanzania and President of Uganda on Bilateral Talks between the Two Countries on the East African Crude Oil Pipeline (EACOP) Project on the 21st May 2017 at the State House Dar Es Salaam, Tanzania (21.05.2017)

The Battle for the Oil the Coast; the Continuation of the diplomatic squabble between Kenya and Tanzania!

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.

Reference:

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

The Battle for the Ugandan oil to the Coast; As the Tanzanian and the Kenyan suitors try to bait Mzee

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 12^th 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.