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THE KENYA – UGANDA OIL PIPELINE PROJECT. by Ben Twodo MINISTRY OF ENERGY AND MINERAL DEVELOPMENT, UGANDA. STRUCTURE. Project Inception First Feasibility Study Complementary Study Highlights of the Report Ownership and Management Implementation Conclusion. INCEPTION OF THE PROJECT. - PowerPoint PPT Presentation
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THE KENYA – UGANDA OIL PIPELINE PROJECT
byBen Twodo
MINISTRY OF ENERGY AND MINERAL DEVELOPMENT, UGANDA
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
STRUCTURE1. Project Inception2. First Feasibility Study3. Complementary Study4. Highlights of the Report5. Ownership and Management6. Implementation7. Conclusion
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
INCEPTION OF THE PROJECT
A Memorandum of Understanding (MOU) between Kenya and Uganda signed in May 1995
A Joint Coordination Commission (JCC) established
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
INCEPTION cont’d …
The TOR of the JCC initially to coordinate the feasibility study for the pipeline extension.
TOR expanded in Oct 2000 to include implementation of the entire project.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
INCEPTION cont’d …
Agreed from start that the project be promoted and developed as a regional project.
THE FIRST FEASIBILITY STUDY
The European Investment Bank (EIB) financed the first feasibility study.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
FIRST STUDY cont’d …
An international consultancy firm contracted to undertake a feasibility study in 1997.
The consultant conducted the study in 1998 and presented its report in May 1999.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
FIRST STUDY cont’d …
The study concluded that the project is feasible and viable.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
THE SECOND/COMPLENTARY
STUDY
In 2001, a complementary study was commissioned to:oupdate the first study and reconfirm the pipeline as the least cost mode
oprepare documentation to invite bids from private sector investors
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
COMPLEMENTARY STUDY cont’d …
Study financed by the two Governments under the auspices of the JCC.
Study carried out by another international firm.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
COMPLEMENTARY STUDY cont’d …
Report on Stage 1of the study submitted in Nov 2001.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
HIGHLIGHTS OF THE REPORT
Market demandoPresent demand is about 580,000 m3 p.a.
oDemand grows at 3.5% – 5% p.a
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
HIGHLIGHTS cont’d …
Pipeline routeoPipeline to be extended from Eldoret in Kenya, through Malaba on the border (110 km), through Jinja (130 km from Malaba) then to Kampala (80 km)
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
HIGHLIGHTS cont’d …
oTotal pipeline length approximately 320 km
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
HIGHLIGHTS cont’d …
Pipeline sizeoAn 8 inch diameter pipeline recommended
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
HIGHLIGHTS cont’d …
Pipeline capacityoPumping flow rate of 168 m3 per hour
oAnnual capacity is 1,200,000 m3
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
HIGHLIGHTS cont’d …
No engineering design at this stage.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
KAMPALA TERMINAL
A common user terminal to be located in Kampala
Terminal to be located east of the city
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
KAMPALA TERMINAL
Ministry prefers location west of the city to lessen truck traffic through city
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
KAMPALA TERMINAL cont’d …
Kampala terminal capacity to be 72,000 m3 comprising:
o7 productso4 interface tanks
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
KAMPALA TERMINAL cont’d …
Tanks Configuration o MPS - 2 tanks - 32,500 m3
o BIK - 2 tanks - 5,654 m3
o JET - 2 tanks - 10,544 m3
o AGO - 2 tanks - 22,570 m3
o Interface - 4 tanks 904 m3
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CAPITAL COST ESTIMATES
Cost estimates for basic development - $96.9 million
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CAPITAL COSTS cont’d …
oDesign, engineering, supervision - $7.2 m
oPreliminaries and general costs - $5.4 m
oPipe laying - $42.2 moEldoret terminal - $4.6 m
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CAPITAL COSTS cont’d …
oSindendet pump station - $3.4 m
o Intermediate pump station - $3.4 m
oKampala terminal cost - $30.7 m
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CAPITAL COSTS cont’d …Additional $12 million for:
o Improvement of pumping capacity at Burnt Forest in Kenya – $5.1 m
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CAPITAL COSTS cont’d …oT-off to government’s storage depot in Jinja; additional facilities - $2.1 m
oRe-locating terminal west of Kampala - $4.7 m
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
ECONOMICS
Current truck transportation rates vary $38 - $42 per m3
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
ECONOMICS
Viability of the project tested for various tariffs and investment configurations.
The IRR in all cases showed the project to be viable; 18% - 22%
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
GOVERNMENTS POSITION
The complementary study report was accepted by JCC in 2001
The JCC recommended to the two Governments to implement the project.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
GOVERNMENTS POSITION cont’d …
Extension to be independent of existing Mombasa – Eldoret pipeline (owned and managed by GoK through the Kenya Pipeline Company).
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
GOVERNMENTS’ POSITION cont’d …
A legal framework be developed immediately by the two governments:oBilateral/International agreements defining legal, commercial, financial arrangements.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
GOVERNMENTS’ POSITION cont’d …
oHost country laws on taxation, transportation, customs, etc.
oCommercial agreements – government/company or inter company.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
GOVERNMENTS’ POSITION cont’d …
Engineering design be undertaken parallel to identification of private sector investoroTOR for consultancy being drafted
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
GOVERNMENTS’ POSITION cont’d …
Environment impact assessment study be carried out parallel to identification of private sector investor
oTOR being drafted
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
OWNERSHIP AND MANAGEMENT
Ownership to be public-private partnership on boo terms
oPrivate investor51%oGovernments 49%
(24.5% each)
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
OWNERSHIP & MANAGEMENT cont’d …
Private sector to manage and operate the pipeline
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
OWNERSHIP/MANAGEMENT cont’d …
Governments’ shares to be offloaded to private investors in future
The two pipelines to be unified in future and operated as a single entity; Msa – Kla.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
PROJECT FINANCING
Project financing to be used based on future stream of revenues.
Oil marketing companies willing to sign agreements with promoters.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
WAY FORWARD
Prepare documentation to select private partner for the project
The selection will be through competitive process
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
IMPLEMENTATION TIMETABLE
Prepare documentation for bidding - 2 months
Open invitation for bidding- 6 months
Evaluation, negotiations and contract signing - 6 months
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
IMPLEMENTATION TIMETABLE
Legal framework - 3 monthsEngineering design - 4 monthsEIA - 4 months
These to run concurrent with investor selection
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
IMPLEMENTATION TIMETABLE
Procure, Construction and Commissioning 27 – 32 months
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CONCLUSION
The Kenya – Uganda oil pipeline project is feasible and viable.
Ready market existsAttractive rates of return
assured.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CONCLUSION
The project classified as high priority in both countries.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CONCLUSION cont’d …
The project to be implemented as a regional project in the spirit of East African Community (EAC), the New Partnership for Africa (NEPAD), etc
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CONCLUSION cont’d …
Many financial institutions have indicated interest to support the projectoWorld Bank Group, EIB, AfDB, PTA Bank, EADB, etc.
oBilateral sources and finance houses, etc.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CONCLUSION cont’d …
A number of investors have expressed interest in the project
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
COME, LETS DO BUSINESS TOGETHER
THANK YOU!