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Kenya, Tanzania to Fast-Track Dar es Salaam-Mombasa Gas Pipeline in Bid to Cut Fuel Costs

By Fantine Gardinier – Samizdat – 10.10.2022

During a visit to the Tanzanian port city of Dar es Salaam on Monday, Kenyan President William Ruto and Tanzanian President Samia Suluhu agreed to fast-track construction of a new gas pipeline connecting the city to Mombasa, Kenya’s main port.

“We will now expedite the gas pipeline from Dar es Salaam to Mombasa and eventually to Nairobi so that we can use the resources that we have in our region to lower energy tariffs, both for industry, commercial and domestic purposes,” Ruto said, according to Kenyan online news portal Tuko.

“In the shortest time possible, we can access the gas resources that you have in your country to drive industrialization in our country. I am confident that as the ministers get down to work, they will provide a brief to you and me to fast-track the project,” he told Suluhu.

She and Ruto’s predecessor, Uhuru Kenyatta, signed a memorandum of understanding on the long-awaited pipeline last year, which would extend 373 miles and cost $1.1 billion.

Just days after Ruto took office last month, he was forced to slash fuel subsidies, thanks to an International Monetary Fund (IMF) bailout that included such neoliberal stipulations in its contract. By mid-October, the prices of several types of fuel are expected to increase sharply in Kenya, putting a dent in Ruto’s plans to improve the country’s economic life for millions of Kenyans.

Ruto’s visit, his fourth foreign trip since taking office but his first focused on bilateral deals, is aimed at further bolstering Kenya’s burgeoning trade with Tanzania, its southern neighbor and fellow former British colony.

“We want to double trade, which is doable,” he said. Kenya-Tanzania bilateral trade amounted to nearly $1 billion last year, according to The East African. Years ago, their rivalry led to mountains of trade barriers being imposed, but both countries have labored in recent years to slash them as competition has turned toward cooperation.

“In total, our experts identified 68 barriers which were reviewed and 54 non-tariff barriers were removed and now we want our cabinet secretaries to deal with the remaining 14 so as to ensure there is freewill to trade,” Suluhu said on Monday.

Last month, Suluhu also penned a deal with Mozambican President Felipe Nyusi to expand trade ties as well as defense cooperation, with both nations desiring to quell a cross-border insurgency and re-establish and expand trade.

Last year, Uganda, Tanzania, French-owned oil giant Total, and China National Offshore Oil Corporation (CNOOC) signed a series of deals to build a massive 900-mile-long gas pipeline from western Uganda’s oil fields to the Tanzanian port of Tanga. The East African Crude Oil Pipeline (EACOP) will pass along the southern edge of Lake Victoria, circumventing Kenya before crossing northern Tanzania. It is expected to begin pumping oil in 2025 and cost $10 billion.

In March, Tanzania also announced a massive new liquefied natural gas (LNG) project expected to draw $10 billion in investment. Rising energy costs thanks to a global inflation problem and Western sanctions on Russia, the world’s largest energy exporter, have created problems for nations like Kenya, that import much of their energy, but opportunities for nations like Tanzania, which export it or have untapped reserves.

October 10, 2022 - Posted by | Economics | , , , ,

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