Home  >>  News >> Economy >> 

Tanzania-Kenya Connections Bear Down Over Uganda Trade Deal

What will bring Kenya and Tanzania together following a rift that is growing due to Uganda’s crude oil pipeline construction project?

At the moment, Kenya and Tanzania are eyeing one damsel and as expected from suitors, they are trying everything possible to impress Uganda, but in the process,straining their own relationship.

What started as a competition for the best country to offer a better deal to Uganda in the construction of a pipeline to help the landlocked nation transport it’s newly found treasure, has created a rift between Kenya and Tanzania.

In the past, Uganda held separate talks with the two competing nations in hopes it will strike a viable deal that is not only cost effective but also efficient as they venture into the oil business joining the likes of South Sudan that has been in the business for a longer period.

In August, Kenya and Uganda settled on the construction of a pipeline from Uganda’s fields in the Lake Albert basin through Kenya’s oilfields near Lake Turkana, and on to Lamu on the Kenyan coast.

While Kenya was breezing at the success, Tanzania announced that it had reached a separate deal that would see Uganda’s oil ‘dock’ at the Port of Tanga- a stub on the back for Kenya.

With a bleeding heart, Kenya called on its maiden to try and straighten things before it was too late. President Yoweri Museveni met President Uhuru Kenyatta to discuss the way forward.

While they did not reach an agreement, the two countries agreed to follow up on the matter after their separate technical team analyzed the best options.

And this is where it got interesting. Following the meeting between the two heads of state, Tanzania was displeased with the proceedings. This led President John Magufuli to deny the Kenyan energy officials entry into the Port of Tanga.

According to reports from Kenya, the team was on tour to the Tanga Port acting on the presidential order to have all three portsTanga, Mombasa, and Lamu compared technically to inform in the final decision making.

Although the two nations are set to benefit from the Ugandan deal, what are pushing them to secure the pact are the giant oil companies behind the scenes.

Present at the meeting between Kenya and Uganda were Frances’ Total, UK’s Tullow Oil and China’s CNOOC who sent a strong support for the Hoima-Lokichar Lamu route (the Kenyan option).

Most recently, Total E&P Uganda said it is committed to constructing the $4 billion crude oil pipeline through Tanga regardless of ongoing talks between Kenya and Uganda.

During a two-day East Africa Oil and Gas conference in Tanzania, the company’s general manager Adewale Fayemi said: “As a company, our position remains that we are going through Tanga. I understand there are issues being discussed but our position remains the same.”

With Total which is a major financier in Uganda’s crude oil- in the picture, Kenya could lose out on the bid.

Additionally, the Tanzania Petroleum Development Corporation (TPDC) Executive Director James Mataragio announced that France had made available $4 billion needed to begin construction and are willing to start by August and have it completed in two years.

These developments, have forced Kenya to start rethinking of going it alone in case everything fails.

“We will build an oil pipeline whether we are together with the Ugandans or not,” Energy Principal Secretary Joseph Njoroge said.

Deal could worsen Tanzania-Kenya shaky relationship?

If the ongoing discussions favor Kenya, this could further draw Tanzania -Kenya trade relations apart.

Tanzania is accused of putting non-trade barriers on Kenyans including the delay of work permits, soiling East African Community integration efforts.

Consistent with data from the Kenya National Bureau of Statistics (KNBS) released in February, Tanzania reduced its imports from Kenya last year from Sh33.3 to Sh25.3 billion, gesturing the worsening relationship between the two countries.

On the other hand, the relationship between Uganda has been blossoming, with the latter’s imports from Kenya standing at Sh60 billion by February.

Moreover, Tanzania has not embraced the integration spirit in infrastructure projects along the Northern Corridor (where crude oil pipeline is a major project) while Uganda is part of the bloc which consists of five members.

With such a heated deal on the table, the relationship between Kenya and Tanzania remains at the ‘wait and see’ scenario.

By Robert Muriisa, African Exponent.

Follow Us on Facebook and Twitter

Leave your comment

Your Name

Your Email

Your comment

Close X