Intrigues and power play that stand in the way of an oil pipeline

A toxic convergence of national, corporate and personal interest on two competing oil pipeline routes is threatening regional integration in a dramatic saga involving Kenya, Uganda and Tanzania.

Kenya and Uganda had initially agreed on the Hoima-Lokichar-Lamu oil pipeline, but Tanzania later announced it had reached a separate deal for a route from the oilfields of north-western Uganda to the port of Tanga.

On Monday, Uganda’s President Yoweri Museveni was in Kenya for fresh talks with President Uhuru Kenyatta but no deal was reached.  

The clash of interests over the route to be used to transport Uganda’s crude oil to the market has not only left Kenya in a tricky situation over the realisation of the ambitious Lamu Port Southern Sudan-Ethiopia Transport (Lapsset) infrastructure project but also split the two countries that were leading the so-called “Coalition of the Willing” in the East African Community that has been working without Tanzania in its push for faster regional integration.

Landlocked Uganda, which so far has the largest oil deposits in the region, is the centre of attraction as Kenya and Tanzania offer to give access to their ports, in a high stakes political game which experts say is fuelled by desire for regional dominance.

“As the longest serving leader in the region, President Museveni is experienced enough and may be using this pipeline deal to get a lot of concessions from Kenya and Tanzania.

UGANDA ASSERTING ITSELF

Uganda is asserting itself and, even if the agreement with Tanzania was to be abandoned, Kenya would have to concede a lot to Uganda.

These are bargaining tactics,” Dr Patrick Maluki, a lecturer at the Institute of Diplomacy and International Studies (IDIS) at the University of Nairobi, observes.

While Uganda may be dangling the pipeline as a diplomatic carrot to Kenya and Tanzania, it is the underlying interests that may be pulling the strings.

At the centre of the push and pull are Japanese Toyota Tsusho Corporation, which favours the Kenyan route and had done three feasibility studies, and France’s Total Petroleum that has been pushing for the Uganda-Tanzania option.

There are also allegations that the multinationals may have entered into secret deals to give a stake in the oil pipeline to influential individuals in Kenya and Uganda.

The interests of the powerful people in Kenya, according to sources, will partly be through a Gulf bank while a Chinese corporation will reportedly take care of the Ugandan side.

The conflicting interests have further complicated the talks as considerations beyond technical, financial and security details come into play. The multinationals also retain a big say in the final decision.

President Museveni’s trip to Kenya came hours after the Sunday Nation reported last weekend that Kenya had decided to consolidate its position as the preferred petroleum products importation route for landlocked East African nations by extending the Mombasa-Nairobi pipeline to the border towns of Busia or Malaba.

A Kenyan delegation led by President Kenyatta is supposed to meet top energy officials in Uganda next week to harmonise the issues that arose from last week’s meeting in Nairobi.

The issues in question are the depth of the Kenyan port, weather, cost and constructability, the Sunday Nation has learnt.

“There has always been a scramble for African minerals and whatever is happening is nothing less than that. Whatever is happening echoes both internal as well as external dynamics at play,” said Dr Maluki.

LAPSSET

In its original form, Lapsset was envisioned as a trans­formative project linking Lamu on Kenya’s coast to South Sudan, Ethiopia and Uganda with an oil pipeline, railway and highway to enhance regional integration.

It is this message that Presidents Kenyatta, Museveni, Salva Kiir of South Sudan and Hailemariam Desalegn of Ethiopia  jointly took to investors at the US-Africa summit in August 2014 seeking financing worth $24 billion (about Sh2.4 trillion at the time).

Experts say Kenya, the region’s economic powerhouse, is expected to be the key beneficiary of Lapsset.

“Once complete, Kenya will be the originator of trans-boundary transport projects, special economic zones and Free Trade Areas, which will put us ahead of other economies because most of their goods will pass here,” said Dr Samuel Nyandemo of the University of Nairobi’s School of Economics.

Could this be why Tanzania and Uganda are not keen on allowing the project to be completed as planned and, in effect, boost Kenya’s influence?

“Once you have ergonomic power within the East African community, it gives you power to bargain within the Horn of Africa.

Currently this privilege belongs to Kenya and both Uganda and Tanzania think that by subduing their neighbours, they will overtake her which reverses the steps made in achieving regional unity,” said Patrick Magero, an international relations and peace studies lecturer at the United States International University Africa (USIU-A).

As the push and pull over the pipeline route unfolds, regional integration has now become the focus.

CRISIS

The crisis came to a head on Wednesday when Tanzania confiscated the passports of a Kenyan delegation, including Energy Cabinet Secretary Charles Keter, and denied them access to the port of Tanga.

However, a delegation from Uganda, led by Energy minister Irene Muloni, was allowed to proceed with the tour.

The officials were part of a joint delegation from Kenya and Uganda that was carrying out a presidential directive to iron out issues that arose from a meeting held on Monday at State House, Nairobi.

It is understood that Tanzania confiscated the passports belonging to the Kenyan delegation as a retaliation for not being invited to the talks in Nairobi but the Kenyan government insists Tanzania should keep off as it has not made oil discoveries of her own.

“This is economics. Tanzania does not have oil and they are not even investors in either Lapsset or in the Uganda pipeline because even if they say that passing through Kenya is costly, who will pay the difference?” Mr Keter told the Sunday Nation.

He added: “Let us not mistake this to be just an argument between two countries because as much as this is the East African region, let us disagree because of facts and not innuendos.”

Mr Magero said even though the Tanzanian government was intent on “making a major statement”, denying the Kenyan government delegation, including a Cabinet Secretary, access was too harsh.

The Wednesday incident has now brought into sharp focus the EAC integration.

Kenneth Okwaroh, who is a Director Policy & Research at Nairobi-based Africa Centre for People Institutions and Society (Acepis), says disagreements could distract the EAC leaders from proceeding with integration.

“The disagreements on the oil pipeline route negotiations amplify already existing sounds of discord in the community.

Secondly, it illustrates the possible decline of Kenya as a geo-economic power in the region, which impairs Kenya’s ability to lead and shows a crisis of leadership in the process.

Lastly it shows the frailty of the EAC integration project and the inability of its key organs (like the secretariat) to deal with issues that justify their very existence,” said Mr Okwaroh.

Opposition MP John Mbadi, who is also the ODM chairman, however, blamed Kenya for taking matters for granted.

“This is something that should have been foreseen. The approach of Kenya was to work with Uganda at the exclusion of Tanzania but something should have been done to avoid the embarrassing situation we now find ourselves in. Before you start a project of such magnitude, all the outstanding bilateral and multilateral issues should be thrashed out openly and transparently,” said Mr Mbadi.