Kenyan Oil Pipeline Contract Canceled

The downfall of the Libyan regime of Colonel Muammar Gaddafi is impacting eastern Africa.

Libyan firm Tamoil in 2007 was awarded a contract to construct the $300 million Eldoret Kampala pipeline, which has now been canceled.

Both the Kenyan and Ugandan governments decided to cancel the contract in the wake of the overthrow of Gaddafi's regime.

Tamoil was a company included in the Libyan government’s Libya Africa Investment Portfolio  (LAP) and was managed by Gaddafi loyalists, The Nairobi Star newspaper reported.

After the agreement was signed in 2007 following intense lobbying by the Libyan government, Tripoli pledged to finance over 70 percent of the pipeline’s costs. Regarding the new geopolitical realities in North Africa, Kenya's Energy Permanent Secretary Patrick Nyoike said simply, "Tamoil cannot do the job."

Prior to the outbreak of conflict, Kenya was attempting to negotiate a concessional rate for petroleum imports from Libya to help shield the country from its massive oil import costs.

Kenya has recently come under increasing international pressure to freeze the Libyan assets in Kenya but according to Kenyan Foreign Minister Moses Wetangula, Libyan investments in Kenya belong to the Libyan government through the country’s sovereign LAP fund, which currently owns one of Kenya’s leading oil marketing firms and prominent tourist hotel in Nairobi, among other properties.

By. Joao Peixe, Deputy Editor OilPrice.com