World Bank pledges $600 million to fund Uganda-Kenya oil pipeline

October 28, 2014 | East Africa, Finance, Pipelines

Kampala, Uganda | – The World Bank has pledged some $600 million to facilitate the construction of a regional pipeline linking oil fields in Uganda, Kenya and South Sudan, the lender said Monday.

In a statement, the World Bank said that the funds would be provided by its private lending arm, the International Finance Corporation and is part of a $1.8-billion loan to fund various infrastructure projects in the Horn of Africa region, where companies have made a flurry of oil and gas discoveries in recent years.

A new World Bank Group paper forecasts that the Horn will undergo dramatic and lasting change when oil production starts in Kenya, Uganda, and possibly Somalia and Ethiopia.

The aid efforts are part of a greater initiative funded by the UN, the EU, the African Development Bank and the Islamic Development Bank to boost infrastructure projects, to address economic growth in the region poised to become the next energy hub.

The 1300-km (806-mile) pipeline is expected to link oil fields to Uganda, South Sudan and Kenya. The project, which is expected to cost up to $5 billion is expected to help landlocked South Sudan export oil.South Sudan relies on pipelines that straddle Sudan, from which it broke away, to export some 245,000 b/d of crude. Civil war in South Sudan has also slashed output by a third.

Uganda and Kenya have discovered huge amounts of crude, but they will require a heated pipeline to export the waxy crude, through the Kenyan port of Lamu.