I use the word “revert” because prior to 1977, all oil exports to Great Lakes countries were done by Ugandan oil companies from Kampala. Block trains from Mombasa oil terminals would haul petroleum products to Kampala, Jinja and Kasese oil depots where exports to Rwanda, Eastern DRC, and South Sudan were loaded.
Then in mid-1977 the East African Community (EAC) collapsed and with it the regional railways and lake transport systems. As EAC countries shared the railway assets, deliveries of oil to export markets could not be guaranteed.
Mandera transporters grabbed the opportunity and relocated their trucks from Somalia to Kenya to transport goods and oil from Mombasa to Uganda. Somalia was all road transport as the country has no railways.
In response to the crisis, the Rwanda government formed a State transport company (STIR Kigali) to haul imports from Mombasa, and a State oil company (Petrorwanda) to source products direct from Kenya. On their part, Kenyan oil companies introduced a new exports business line to service regional exports.
When the new oil pipeline reached Nairobi in 1978, oil exports shifted from Mombasa to Nairobi oil terminals, while the 1993 pipeline extension to Kisumu and Eldoret pushed exports further west.
And when the pipeline extension agreed by Presidents William Ruto and Yoweri Museveni last month is done, all Great Lakes oil exports will revert to Kampala.
Relocation of exports to Uganda will compel Kenyan oil companies to surrender their export business to Uganda firms. However, I see the Uganda National Oil Company (UNOC) being the main exporter of products from Uganda to Great Lakes neighbours, with supply chain backing from Middle East oil traders who have penned supply arrangements with UNOC.
Rwanda may opt to extend the pipeline from Kampala to Kigali and abandon petroleum sourcing from Dar Es Salaam.
The Eldoret/Kampala pipeline project carries a number of investor risks. This will be a new petroleum infrastructure investment at a time the world is going through an energy transition to electric mobility, a factor that makes future oil demands and throughputs for the pipeline uncertain.
