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South Sudan, Ethiopia and Kenya to share cost of Lamu oil pipeline project

Written by Jeff Otieno, The EastAfrican
Sunday, 19 February 2012 13:04

(The EastAfrican) - Countries expected to benefit from the construction of the Sh21.5 billion ($253million) Lamu-Southern Sudan-Ethiopia Transport (LAPSSET) Corridor will have to foot part of the budget, it has emerged.

There is fear that some parts of the project, among them, a highway, a railway line, a pipeline and a port, might delay, or even stall, if benefiting countries do not commit funds from their national budgets.

To minimise financial difficulties, the LAPSSET master plan report proposes that Kenya, South Sudan and Ethiopia share part of the cost, even as they seek donor funding. The plan report also acknowledges that some of the projects might not be completed on time if funds are unavailable.

Possibility of undertakings of the public infrastructures depends entirely on fund and budget availability and proactive involvement of the government of Kenya, said the report. President Kibaki will conduct the groundbreaking ceremony of the multimillion-dollar project, on March 2. Prime Minister Meles Zenawi of Ethiopia and Salva Kiir of South Sudan are expected to attend the function. The ceremony will mark the commencement of the construction of the Lamu port.

LAPPSET is expected to enhance regional trade, not only linking East African countries by making movements of goods and services easier, but also opening up sections of the hinterland that have remained underdeveloped due to poor infrastructure.

The report acknowledges that since the cost of the project is comparatively large compared to Kenya’s past Gross Domestic Product (GDP) and national budget, co-operation of neighbouring countries is indispensable in the construction of the Lamu port, railway and highway.

Though construction of oil refineries and resort cities are usually made through private investment, the report proposes that part of the investment be borne by neighbouring countries that will benefit from LAPSSET.
It suggests that Southern Sudan help fund crude oil pipeline, and both Southern Sudan and Ethiopia give Kenya a helping hand in the construction of an oil refinery, under the coordination of the LAPSSET Corridor Authority.

Already a high level delegation from South Sudanese has visited Kenya and held discussions with government officials on the construction of the 1,715 km crude oil pipeline.

Initially South Sudan had planned to finance the construction of the whole pipeline, with Kenya granting the right of passage. However, Kenya’s role is expected to be much broader given its experience in construction and expertise in maintaining an oil pipeline.

The urgency to construct the pipeline increased after South Sudan announced that it no longer intends to export its crude oil through Northern Sudan. Africa’s new nation wants the pipeline (1,288 km long in Kenya, 427 km in Southern Sudan) with a capacity of 500,000 barrels per day be built within 18 months.

Part of the crude oil — 417,600bbl/day — is to be exported from Lamu Port. Crude oil exporting pipelines are planned from the Lamu Tank Terminal located to the north of the Lamu Port to the two Single Point Mooring Buoys (SPMBs) at the outer channels through Pate Island, adds the report.

Another pipeline, for refined oil (diesel 52 per cent, kerosene 29 per cent and gasoline 12 per cent), with a capacity of 82,400 bbl/day will also be constructed.

http://www.newsudanvision.com/index.php ... s&Itemid=6

Ethiopia, Kenya and South Sudan to jointly fund new oil pipeline

By Tesfa-Alem Tekle

February 20, 2012 (ADDIS ABABA) – The cost of a massive a transportation corridor project aimed to link Kenya to South Sudan and Ethiopia will be shared among the three east African countries, according to a report.

The $22billion dollar Lamu-Southern Sudan-Ethiopia Transport (LAPSSET) Corridor project is expected to be launched next month.

To cope up financial constraints, the LAPSSET master plan report has proposed that the subjects - Kenya, South Sudan and Ethiopia should share part of the project cost, although the countries are seeking an external finance source.

The groundbreaking ceremony will be held on 2 March in the presence of President mwai Kibaki of Kenya, Ethiopian Prime Minister, Meles Zenawi, and South Sudan president, Salva Kiir.

The project’s main section is the Lamu Port, which will have a road network linking Kenya with its neighbours Ethiopia and South Sudan but it also incorporates a port at Manda Bay, a standard gauge railway line to Juba, oil pipelines, an oil refinery at Bargoni and three Airports.

Once completed the Lamu transportation corridor will considerably advance transportation network, boost the volume of cross-border trade across the region playing a vital role in socio-economic development.

It will also open business and investment opportunities and further will have enormous savings on transport and shipping costs as well as transit time.

Following oil row with Khartoum over oil transit fees, Juba is pushing the construction of the project mainly to get rid of its dependency to Khartoum’s pipe lines to export its crude oil.

Land locked South Sudan has shut down its oil pipeline that runs through Khartoum accusing the latter of “stealing” an estimated $350 million worth of its oil and is seeing an alternative way via Kenya ports for its oil export.

Africa’s newest nation wants a pipeline (1,288 km long in Kenya, 427 km in Southern Sudan) with a capacity of 500,000 barrels per day completed within 18 months.

South Sudan says it is willing to pay $1 per barrel exported through Port Sudan saying this inline with international rates, however, North Sudan is demanding over $30.

So far talks brokered by the African Union in Addis Ababa have failed to bring the two sides to a solution.

Sudan expert Alex de Waal has described the move to stop production as economic suicide on the part of the Juba government .

Khartoum has accused South Sudan of trying to undermine the northern economy to try and effect regime change, an allegation denied in Juba.

From 2005 until July 2011 the two sides shared revenues from South Sudan’s oil 50:50 as part of the 2005 wealth and power sharing agreement that ended decades of war.

Juba has recently announced austerity measures to adjust to the lack of oil revenue, which made up 98% of the government’s budget.

(Sudan Tribune)