A World Bank arm has pledged Sh54 billion ($600 million) to fund an oil pipeline linking upstream operations of Kenya, Uganda and South Sudan.
The funding by the International Finance Corporation (IFC), the private sector lending and investment arm of the World Bank, is part of a Sh160 billion ($1.8 billion) loan for projects in the Horn of Africa.
“IFC investments under the new Horn Initiative will include a regional pipeline linking Uganda and Kenya, greater investments in agribusiness expansion in storage, processing and seeds,” said a statement by the bank.
The World Bank president Jim Yong Kim and UN secretary-general Ban Ki-Moon are set to visit Kenya Wednesday.
The financing targets 1,300 kilometres but the whole pipeline project is estimated to cost $5 billion to complete.
From Eldoret to Kampala, a distance of about 350 kilometres, the pipeline is expected to cost not less than Sh27 billion, according to one estimate. The current pipeline in Kenya reaches Eldoret.
The proposed project also involves the section between Kampala and Kigali, a length of 434 kilometres, that is not under the $600 million financing.
The tender for the pipeline was advertised last month by the three governments. It called for a contractor with both local and international experience.
The contract for the successful bidder will involve the procurement, construction, testing and commissioning of the pipeline.
The venture is expected to be completed in three years and will serve several countries including DR Congo, Burundi and South Sudan.
The funds made available by the IFC are also intended to support renewable energy projects such as wind energy and access to markets.
Besides the pipeline, the World Bank is also providing technical assistance on a project to manage petroleum business and proceeds once actual extraction begins.
The Kenya Petroleum Technical Assistance Project is intended to strengthen the capacity of the government to manage the petroleum sector and resulting wealth for sustainable development.
The project has several components, the first being reforms and capacity building to enable the State manage oil to international standards.
The second component involves revenue and investment management, driven by the need to avoid possible wastage that may come with large amounts of oil.
The third component of the technical assistance project will enable the State integrate the petroleum sector in the broader economy.