Uganda’s prolonged delays in completing the construction of an oil jetty on its side of Lake Victoria has frustrated Kenya’s efforts to relaunch the Kisumu Port, whose refurbishment last year cost taxpayers $30 million (Ksh3 billion).
Nairobi has since August last year been counting on revival of Kisumu Port to create thousands of jobs and revive the economy of Western Kenya by re-opening the key road-rail-and-water transport corridor.
Uganda is months behind schedule on completion of its oil jetty, which forms the major component of the revived seaway.
“The Kenyan oil jetty was completed and is ready for use but unfortunately our counter partners on the other side of the lake, which is Uganda, are not ready,” said the Kenya Pipeline Corporation (KPC) managing director, Dr Macharia Irungu, in a presentation to the Senate Standing Committee on Energy last week.
Kenyan President Uhuru Kenyatta late last month made an impromptu visit to the port, one of many tours of the facility that he has taken since it was completed in August last year.
He silently departed without any announcements on the timelines for the facility’s re-launch, prolonging what is already a long wait for Kisumu residents who had hoped for an economic boost from the port.
KPC has opened talks with Tanzania, Dr Irungu said, on the possibility of supplying the Musoma Port via Kisumu.
The Ksh1.7 billion ($17 million) Kisumu oil jetty was itself finished more than two years ago, in 2018.
It is designed to facilitate easy transportation of petroleum products to Uganda, Rwanda, Burundi, South Sudan and parts of the Democratic Republic of Congo.
Use of Lake Victoria
“We are now encouraging Uganda and Rwanda to draw their fuel not from Mombasa or Eldoret but from Kisumu and then use Lake Victoria to cross and that is operational as we speak. These are all initiatives that were discussed as part of East African integration,” Kenya’s Cabinet Secretary in-charge of the East African Community (EAC) Affairs, Mohammed Adan, told The EastAfrican.
The Kisumu Port refurbishment, touted as product of the political camaraderie between President Kenyatta and Opposition leader Raila Odinga, is a multimodal regional gateway that has been neglected for decades as transporters shifted to use of the road.
The Kenyan government is also reviving the metre-gauge railway connection to the port from via the Mombasa to Naivasha standard gauge railway.
The Kisumu port is seen as the linchpin to increasing trade with the neighbouring countries.
Kenya Railways has refurbished the MV Uhuru, a vessel that will be used for transportation of goods between the Kisumu Port and Uganda harbour of Port Bell.
“Ultimately the best way to transport fuel is via Kisumu oil Jetty but the jetty in Uganda is not in place. So what we are doing is to maintain the jetty ready for operation. Separately we are selling petroleum products to Uganda via Lake Victoria port using the MV Uhuru,” said John Ngumi, the chairman of the Industrial and Commercial Development Corporation (ICDC) and former chairman of the Kenya Pipeline Corporation.
According to Mike Mukula, chairman of Mahathi Infra Uganda Ltd, the consortium of private investors comprising India’s Mahathi Infra Group, Kenya’s Siginon Group and Uganda’s Fortune Energy that is building the jetty on the Ugandan side, the project is 80 per cent done and completion is slated for the first quarter of next year.
Completion of the $270 million project has also been affected by the Covid-19 pandemic.
More than a jetty
“We are on course to completing the facility and we apologise to Kenya for the delays. We must appreciate this was a complex project that involves not just the jetty but also storage tanks, pipes, ships and even roads,” Mr Mukula said in an interview.
Initially the company had attributed the delays to challenges of securing funding but that has now been resolved with Equity Bank, which is among the key financiers of the project, providing $70 million.
Shareholders of the consortium companies are providing the balance of the funding.
The total installed capacity of the 14 tanks is 70 million litres, way much more than the Kisumu and Eldoret depots combined, and the jetty is designed to enable seamless availability of petroleum products to neighbouring countries.
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When complete, Uganda will for instance have a massive supply headroom considering the country’s consumption is 4.5 million litres per day.
Already, oil marketers like Shell/Vivo, Total and Mogas have signed off-taker agreements with Mahathi, making the jetty a key facilitator of petroleum trade in East Africa.
The completion of Uganda’s jetty is crucial to the commercial viability of the Kenyan project, since Kampala is the major recipient of Kenya’s oil products, accounting for about 70 per cent of all exports.
The jetties are expected to have higher safety and reliability and ensure efficient delivery of petroleum products across the region, removing an estimated 100 oil tankers from the roads.
The Lake Victoria port network also includes Mwanza, Musoma, and Bukoba in Tanzania and Entebbe and Port Bell in Uganda.
KPC expects to ride on both the port and jetty to increase it exports to regional markets, where it has lost about 30 per cent of its business to Tanzania, which exports through the central corridor.