Transcript THE PROPOSED KENYA-UGANDA OIL PIPELINE EXTENSION

THE KENYA – UGANDA OIL
PIPELINE PROJECT
by
Ben Twodo
MINISTRY OF ENERGY AND MINERAL
DEVELOPMENT, UGANDA
STRUCTURE
1.
2.
3.
4.
5.
6.
7.
Project Inception
First Feasibility Study
Complementary Study
Highlights of the Report
Ownership and Management
Implementation
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.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
THE FIRST FEASIBILITY
STUDY
The European Investment
Bank (EIB) financed the first
feasibility study.
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:
o update
the first study and
reconfirm the pipeline as the
least cost mode
o prepare 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 demand
o Present demand is about 580,000
m3 p.a.
o Demand grows at 3.5% – 5% p.a
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
HIGHLIGHTS cont’d …
Pipeline route
o Pipeline 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 …
o Total
pipeline length
approximately 320 km
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
HIGHLIGHTS cont’d …
Pipeline size
o An 8 inch diameter pipeline
recommended
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
HIGHLIGHTS cont’d …
Pipeline capacity
o Pumping flow rate of 168 m3 per
hour
o Annual 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
products
o 4 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 …
o Design,
engineering, supervision
$7.2 m
o Preliminaries and general costs
$5.4 m
o Pipe laying
$42.2 m
o Eldoret terminal
$4.6 m
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
CAPITAL COSTS cont’d …
o Sindendet
pump station - $3.4 m
o Intermediate pump station - $3.4 m
o Kampala 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 …
o T-off
to government’s storage
depot in Jinja; additional facilities
- $2.1 m
o Re-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:
o Bilateral/International
agreements defining legal,
commercial, financial
arrangements.
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project
GOVERNMENTS’ POSITION
cont’d …
o Host
country laws on taxation,
transportation, customs, etc.
o Commercial 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
investor
o TOR
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
o TOR
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
o Private
investor
51%
o Governments
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
Engineering design EIA
-
3 months
4 months
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 exists
Attractive 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
project
o World
Bank Group, EIB, AfDB,
PTA Bank, EADB, etc.
o Bilateral 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!
Ministry of Energy and Mineral Development, UGANDA.
Kenya – Uganda Oil Pipeline Project