Mahathi Infra Uganda Ltd has secured an investment from the Africa Finance Corporation to build two self-propelled barges to transport petroleum products across Lake Victoria from Kisumu in Kenya to a storage terminal at Bugiri-Bukasa, near Entebbe.
The special purpose vehicle, comprising companies from India, Kenya, and Uganda, is currently implementing the Lake Victoria Fuel Transportation Project. The initiative involves the construction of four oil barges, a storage terminal at Bugiri-Bukasa, and two jetties at Kisumu and Bugiri-Bukasa to facilitate the loading and mooring of the barges. Mahathi SPV estimates that the project will cost about $270mn to complete.
The $95.25mn (Shs355.6bn) investment by the Lagos-based multilateral development finance institution, which focuses primarily on infrastructure development across the continent, will bring the project closer to completion.
According to Mahathi SPV, the project will reduce the cost of transporting fuel from Kenya, fuel adulteration, and pollution. Currently, most of the liquid petroleum fuels used in Uganda are trucked into the country from Kisumu and Eldoret in Kenya. One barge trip will replace about 200 trucks, according to the Africa Finance Corporation and Mahathi.
The Africa Finance Corporation said Monday its funding would also “support enabling infrastructure including 14 petroleum storage tanks, 20 truck loading bays, a jetty, and a parking lot with a capacity of 50 trucks.” The SPV’s storage facilities are expected to more than double Uganda’s petroleum-storage capacity to 70mn litres.
It added: “Annually, AFC’s investment will eliminate approximately 100,000 truck journeys on East Africa’s busiest transport route – from Kisumu, Kenya, to Kampala, Uganda. This reduction in road traffic will ease congestion and minimise issues such as product adulteration, theft, and accidents.
“It will also alleviate working capital burdens for small and medium-sized distributors, enabling them to procure products directly from the Mahathi storage facility, reducing delivery time from seven days to immediate access.”
The project is expected to reduce greenhouse gas emissions by more than 95 per cent, according to the Africa Finance Corporation.
“Through this investment we are contributing to the transformation of petroleum transportation in Uganda with a lower-emissions alternative that cuts costs significantly, reduces road congestion, and improves mobility and accessibility for people, leading to sustainable economic growth and productivity,” said Samaila Zubairu, chief executive of the Africa Finance Corporation, in the press release.
In addition, once completed, the project will not only serve the local market, but will also help reduce fuel costs for neighbouring landlocked countries that, like Uganda, rely on fuel imports from Kenya. And once Uganda becomes a commercial oil and gas producer with its refinery up and running, stakeholders say it will facilitate the transport of fuel from Uganda to Kenya.
Mahathi Infra Uganda Limited was set up in 2015 as a special purpose vehicle for the project. The company’s shareholders include Mahathi Infra Services Pvt Ltd from India, Fortune Energy from Uganda, owned by the NRM politician Mike Mukula, and Siginon Group, a Kenyan logistics firm controlled by the family of the late President Arap Moi.
