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Congo warms up to pipeline, railway projects on the Northern Corridor

Monday December 08 2014
congo

Workers undertake first flaring test at Waraga 1 Well in Kaiso-Tonya in western Uganda. PHOTO | FILE

The government of DR Congo is contemplating taking up a stake in the proposed crude oil export pipeline in western Uganda in strongest sign yet of warming ties between the two neighbouring countries.

Uganda’s oil fields with proven reserves of 6.5 billion barrels of crude oil lie near the border with DR Congo and some of the deposits are believed to lie across both countries.

Uganda’s Energy Minister Irene Muloni told The East-African discussions are ongoing about DR Congo piggybacking on a planned crude oil pipeline from western Uganda to Lamu on the Indian Ocean to export its own crude via the eastern route.

Total E&P, which is one of the three major players in the Uganda oil sector, also operates and holds a majority stake in Block III on the DR Congo side of the border whose potential is yet to be fully determined.

DRC’s minister for Energy and Petroleum Crispin Atama Tabe recently led a delegation to Kampala that discussed Congo’s potential investment in the pipeline.

Officials from the two countries also held talks on an inter-connected electricity grid between the two countries.

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In the short run this would allow Uganda to export power to eastern DR Congo by the end of the decade when it is expected to have a generation surplus after the 178MW Isimba power dam and the 600MW Karuma dams are commissioned.

Uganda has already extended part of its national grid from Bwera, near the border, into eastern DR Congo. 

“They came to say that we should develop the hydrocarbons in the area jointly and they said they want to join the proposed export pipeline and they also want to contribute to the refinery,” Peter Lokeris, Ugandan Junior Energy Minister said.

“It is a big development. To have joint export of resources you develop a strong neighbourhood and closer ties than ever before because of the common benefits that accrue from earnings and exports,” said Mr Lokeris.

The Congolese delegation made preliminary inquiries about participating in the wider infrastructure developments across the region, including the Standard Gauge Railway planned to run from Mombasa to Kigali with a spur to South Sudan.

Although the inquiries are understood to be at preliminary stages, an extension of the railway into mineral-rich eastern DR Congo could significantly improve the viability of the SGR project, especially the extension from Kampala to Kigali.

READ: EAC states to build 784km oil pipeline

Keith Muhakanizi, the Permanent Secretary in the Finance Ministry in Kampala recently gave the green light to the Malaba-Kampala leg of the SGR but raised the red flag over plans to borrow as much as $8 billion before establishing the viability of the portion to run from the Ugandan capital to the border with Rwanda.  

The Congolese officials were asked to formally write to Kenya’s President Uhuru Kenyatta, who currently holds the rotating chairmanship of the East African Community, to send a delegation of observers to the next infrastructure Summit on the Northern Corridor as a first step toward their possibility of co-investing in the project.

The DRC embassy in Kampala had not responded to an interview request by press time but sources said a delegation from Kinshasa could be expected as early as the next Summit, which was postponed from the end of November to next week.     

“They need to ask to be invited as a government to join the tri-partite agreements and the protocols we have already signed between Uganda, Rwanda and Kenya,” Mr Lokeris said.

“If we discover common fields along the common border it will require agreements by the operating companies in the area then we as government shall facilitate the process,” he added.

The meeting between the Ugandan and DRC officials took place under the aegis of the Joint Permanent Commission established between the two countries after Uganda withdrew its troops that had been involved in the conflict in the DRC in the 1990s and early 2000s.

It comes amid a parallel effort by the two countries to resolve the outstanding matter of the $10 billion fine that the International Court of Justice slapped on Uganda in 2005 over its invasion of DRC. 

After DRC officials presented a revised bill of $23 billion — partly to take inflation into account — Uganda’s Attorney General Peter Nyombi said Kampala had initiated negotiations with Kinshasa over the matter.

The court award is almost twice Uganda’s total external debt and it is not clear how the country would settle the sum without defaulting on its other obligations and sending the economy into ruin.

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