Construction work on a Kenya-Uganda oil pipeline will begin in May, as Uganda seeks to end its over-reliance on road and rail for importing fuel products from Kenya, the Ugandan president said late Sunday
According to a statement from the Ugandan state house seen by Dow Jones Newswires, President Yoweri Museveni said the government has awarded the contract for the project to Libya-based Tumoil.

The project will initially involve a 340-kilometer pipeline from Eldoret in western Kenya to Kampala.

The pipeline would subsequently be extended to Kigali in Rwanda and Bujumbura, the Burundian capital, the statement added.

The first phase of construction will cost $110 million.

Fuel supplies to Uganda, Rwanda, Burundi and eastern Congo have been erratic since late December, following post-election violence in Kenya, the region's main import route for fuel products.

Museveni also said that to ensure a steady flow of petroleum products to the country, Uganda has been in contact with the authorities in Kenya and Tanzania, and Kenyan authorities have agreed to provide escorts for fuel tankers into the country.

However, according to fuel dealers, Uganda continues to face shortages, and fuel prices have more than doubled since last week.Uganda relies on diesel-run thermal generators to produce up to 100 megawatts of power.

The fuel shortage has hit the transport sector, and public transport companies have raised their prices.

These increases have affected the movement of commodities such as coffee, cotton and cocoa from upcountry stations, as, according to coffee dealers, most traders are waiting for prices to stabilize before they transport their produce.

Uganda's main coffee marketing season is currently underway in the central and eastern regions.

According to Museveni, Uganda will be able to produce its own fuel by the middle of next year, once Dublin-listed Tullow Oil (TQW.DB) has set up a mini- refinery near Lake Albert.

The refinery will initially produce heavy fuel oil, kerosene and diesel. Petroleum and aviation fuel will be produced later.
Dow Jones Newswires