Building oil pipeline: Evaluation of firms starts

By Pascal Kwesiga

The Government has started evaluating international firms competing for the construction of the over 200km Hoima-Kampala multi petroleum product pipeline.

Several international firms from outside Africa have submitted bids to build the energy product pipeline from Hoima district, where the oil refinery is to be constructed, to Buloba, in Wakiso, near the country’s capital city, where the distribution terminal is to be set up.

According to the oil refinery project spokesman, Bashir Hangi, the Government is currently evaluating the firms to identify a company that will generate a blueprint for the pipeline’s route and conduct an environmental baseline study for the project.

After the pipeline route has been determined, Hangi, another firm will be engaged to conduct and implement the Resettlement Action Plan (RAP) for the people who will be affected by the project.

Hangi could not give details and names of the firms that have made bids for the Hoima-Kampala pipeline project by press time.

“All the companies we are evaluating are from outside Africa and we want to have this process completed by January,” he added.

Kenya and Uganda also plan to build the Eldoret-Kampala petroleum product pipeline jointly. Hangi declined to comment on the progress of the Eldoret-Kampala pipeline. The two (Hoima-Kampala and Eldoret-Kampala) will be used to move refined petroleum products between Uganda and Kenya.

Buloba, according to the energy ministry, will be the point of sale for Uganda’s oil products for domestic use. The excess will be sold on the international market.

Toyota Tsusho, a Japanese company, is currently conducting a feasibility for the crude oil export pipeline

Uganda and Kenya signed a contract with Toyota Tsusho for the feasibility study in Kampala in November.

According, to the energy minister, Eng. Irene Muloni, the feasibility study will help Uganda and Kenya determine the best option for transportation of crude oil and the most cost effective route.

The options available so far include —the northern route to Lamu port in Kenya (1,380km), central route to Mombasa (1,300km) and southern route to Dar es Salaam (1,950km).

“We are very keen because we want the least cost option. It does not make business sense to spend a lot of money exporting crude oil yet the Government wants to maximise profits,” Muloni explained.

The study that is expected to last for 20 weeks will also produce options on how best the crude pipeline project will be structured in terms of ownership and management between East African states.

The crude oil export pipeline is one the infrastructural projects that East African Governments agreed to undertake.

The Government in June announced two consortia — South Korea’s SK Energy Co and Russia’s RT-Global Resources as the final bidders for the $2.5b refinery to be established in Kabaale, Hoima district.

The consortia, according to, Hangi, were asked to submit the best final offers during parallel negotiations with them. He added that the consortia with the Uganda’s interests at heart will be announced as the final refinery developer and operator. The best firm, he explained, is likely to be known early next year.

Uganda has so discovered 6.5b barrels of oil in the so far most prospective Albertine graben. Only 40% of the graben has been explored for oil.

Geoscientists are also carrying out conclusive studies in five sedimentary basins to confirm the 1990 studies that confirmed the availability of oil in these areas.

The China National Offshore Oil Corporation is currently preparing the Kingfisher oil discovery area in Hoima for production.

The Government is still evaluating applications for production licences from Tullow and Total E & P oil companies. Uganda expects to begin producing oil between 2017 and 2018.