Reflex Eco Group
by Raluca Besliu (Columnist of ThinkAfricaPress)
At the end of June, the presidents of Uganda, Kenya and Rwanda signed a memorandum of understanding regarding the construction of two pipelines across East Africa.
One pipeline would connect South Sudan with Kenya’s Lamu port. The other would extend a pipeline that currently runs between Mombasa port and Eldoret – both in Kenya – across to Uganda and Rwanda.
The agreement remains in its embryonic stages and does not yet have a timetable or calculated cost for construction. But the three parties argue that once it is built, the pipelines will strengthen regional cooperation, reduce energy costs and transform East Africa into a major energy exporter. South Sudan would be freed from its dependency on Sudan’s infrastructure to export its resources, while Kenya and Uganda would be able to more easily exploit their newly-discovered oil reserves.
However, what is good for South Sudan, Kenya and Uganda – and even perhaps most East Africa – might be seen as detrimental by some of their neighbours excluded from the agreements, especially the Democratic Republic of Congo (DRC) and Sudan.
DRC-Uganda: sharing and caring?
Uganda and Kenya currently import their oil from the Gulf region via the Indian Ocean to Mombasa, where it is refined. However, with the new pipeline, these two East African nations could exploit their own resources and provide energy for much of the region.
According to some estimates, for example, Uganda could become a key global oil producer thanks to the 3.5 billion barrels of crude oil reportedly discovered close to its border with the Democratic Republic of Congo (DRC). Exploiting these resources rather than having to import oil would eliminate tanker transportation, reduce production costs, and lower the price of fuel for consumers.
However, tapping into this natural resource wealth may not all be plain sailing. Much of Uganda’s oil is around Lake Albert which is sits on the border with the DRC, and since 2007, tensions have escalated over the demarcation of this region with both sides moving their militaries to the border at one point. Tensions defused with the signing of the Ngurdoto Accords, which established a system for regulating disputes, and earlier this year, the two neighbours agreed to avoid military presence in oil areas and to respect each others’ territorial integrity. But with diplomatic relations delicately balanced, proposals of a pipeline could re-ignite the situation.
To begin with, it is unlikely Kinshasa has forgotten Uganda’s previous involvements regarding natural resources in the DRC. Amidst the insecurity and instability of the two Congo Wars, Uganda occupied areas of north-eastern the DRC and extracted the country’s mineral wealth, a period for which the International Court of Justice (ICJ) in 2005 condemned Uganda.
More recently, Uganda was accused in a 2012 UN report of providing weapons and technical support to the M23 rebels, a group fighting against the Congolese government, and allowing M23’s political unit to operate from Kampala. Uganda denied these accusations.
With relations frayed, trust a scarce resource between the neighbours, and border disputes unresolved, the perception that a new pipeline might exploit the oil around Lake Albert to benefit Uganda at the expense of the DRC could be dangerous – especially given the ongoing insecurity in the eastern DRC region.
Sudan and South Sudan: separating the Siamese twins
The other recently-proposed pipeline – from South Sudan to Lamu port in Kenya – is as, if not even more, controversial.
When South Sudan seceded from Sudan in 2011, it took with it nearly 75% of the oil reserves. However, the infrastructure for refining, transporting and exporting the oil is in Sudan. The two Sudans are thus tied in a symbiotic relationship whereby South Sudan owns the oil, but must pay Sudan transit fees for using its pipelines, refineries and export terminal at Port Sudan to sell these resources.
South Sudan relies on oil for 98% of government revenue and has no alternative to this current arrangement. Much of Sudan’s revenue similarly depends on oil transit fees. This dependence on oil and co-dependence on each other was as tragically exemplified when South Sudan stopped oil production in January 2012 in retaliation at Sudan confiscating oil citing unpaid transit fees. Both countries’ economies plummeted.
Oil production only restarted in April 2013 when a shaky compromise was reached, and since then relations have remained precarious with both sides continuing to accuse the other of supporting rebels in the disputed border regions.
Given this perpetually volatile relationship between the two long-standing nemeses, and the Sudans’ economic co-dependence under the existing arrangement, it is little wonder South Sudan is interested in finding alternative ways of exploiting its oil wealth. However, if a new pipeline was built that bypassed Sudan, South Sudan would have everything to win and Sudan everything to lose. This is not something Sudan would allow to go ahead easily and – given the already long-term low-level conflict simmering in the border regions and the frequent barbed accusations thrown in each direction between the Sudans – it is not difficult to imagine a significant step-up in hostilities were a pipeline to go ahead.
Building the EAC
The proposed pipeline projects are just two of several initiatives being undertaken by Kenya, Uganda and Rwanda as part of the East Africa Community (EAC), which also comprises Burundi and Tanzania. The Community has already established a Customs Union in 2005 and a Common Market in 2010, while it is intending to produce a Monetary Union and, purportedly, eventually transform into a Political Federation of East African States. Some of the other projects to be implemented include establishing an EAC e-identity card, boosting tourism, enhancing electricity generation and rehabilitating a railway line between Kenya and Uganda into Rwanda.
Many of these projects might be successfully carried out and lead to positive results. But for those outside the circle of collaboration, the view is very different. There is a strong possibility that the two pipeline projects could prove to be double-edged swords and re-inflame tensions between hostile neighbours. Once again, oil could prove to be a curse rather a blessing for East Africa.
- South Sudan arrests two Uganda journalists (sudantribune.com)
- East Africa: Can Pipeline Dreams Become Reality? (phantomreport.com)
- South Sudan to shut down oil industry next week (thehindu.com)
- The Battle for Oil in Central Africa (opinion-maker.org)
- Thousands Hiding, Hungry in Bush in South Sudan’s Pibor (voanews.com)
- South Sudan’s Kiir calls for investigation into Jonglei army abuses (sudantribune.com)
- Middle East, Sudan Turmoil Cuts Into World Oil Supply (worldnewscurator.com)
- South Sudan set for new oil pipeline (bbc.co.uk)
- Ecobank gets affiliate in South Sudan (ghanabusinessnews.com)
- Uganda, Kenya, Rwanda agree on oil pipelines (bostonherald.com)