8 September 2010

editorial

Kampala — Uganda and Kenya have agreed a joint partnership to build an oil refinery and a pipeline to exploit the oil in the Albertine basin. In a meeting with a delegation of Kenyan government officials and managers of the Mombasa oil refinery, President Yoweri Museveni appealed to the East African regional countries to support the project.

This is a brilliant idea with lots of economic sense and benefits for the whole region. The east African region relies on imported oil and petroleum products account for between 20 - 25% of the import bill.

With Uganda's oil deposits in excess of 2.5 billion barrels, it has the capacity to greatly supplement, at a much cheaper rate, the regional oil needs which currently stand at 55,000 barrels per day for Kenya, 14,000 barrels for Uganda, 5,625 for Rwanda and about 3,000 barrels for Burundi.

Uganda greatly stands to benefit from Kenya's experience in the oil refinery business. Kenya has a 50:50 joint venture between the Government and several major oil companies that operate the Mombasa refinery which currently supplies 60% of local petroleum demand.

Besides, the joint venture will not only promote cooperation among the East African Community member states, but will also enhance the security of the refinery as it will be seen as a regional facility rather than that of an individual state.

The deal will also put Uganda in a stronger negotiating position as prospective investors in the oil sector will have to negotiate with a bloc rather than an individual country.

The challenge for Uganda is to ensure that the memorandum of understanding with Kenya is foolproof unlike the current agreements where the country is almost at the mercy of the prospecting companies. Otherwise, this is a brilliant initiative that should be supported by all.