Ethiopia signed an oil pipeline deal with Kenya on June 23, 2016, during an official visit by Prime Minister Hailemariam Desalegn to the neighbouring country. Kenya’s President, Uhuru Kenyatta and the visiting PM signed the agreement to construct a crude pipeline from a coastal town Lamu, to Addis Abeba, Ethiopia.
This project aims to integrate the efforts of the two countries as part of joint infrastructure regional projects under the Lamu Port-Southern Sudan-Ethiopia Transport (Lapsset) corridor.
The original plan signed by Ethiopia, Kenya and Uganda involved construction of another crude pipeline from the Uganda Hoima-Lokichar-Lamu route under the Lapsset programme.
Though much detail of the Kenya-Ethiopia deal has not been disclosed in either country, it was learnt that Uganda had abandoned the plan estimated to generate 600 billion barrels of oil from Kenya to Uganda as Kenya set a transportation charge of 12.6 dollars per barrel of oil passing through the Hoima-Lokichar-Lamu Route.
There was yet another proposal involving Tanzania, which offered a better deal to Uganda for a pipeline to transport oil to Tanzania. An agreement was signed but fell through when Uganda opted out because Tanzania proposed land fees, transit charges and taxes on the pipeline. The Tanzanian deal was criticised for not being cost effective.
The development and operation sides of the Lamu to Addis Abeba Route Agreement are planned to be finalised at the end of 2016, the two leaders announced.