Interview: Gregory Meneses
What do you see as the primary challenges in executing the Horn of Africa Pipeline project?
GREGORY MENESES: Ethiopia has been undergoing phenomenal growth for the past decade and has and has been growing from a low base. One of the challenges has been to cater to that growth and design a pipeline that is sufficient in size to take into account rising levels of consumption for the next 15-30 years and beyond, while ensuring the project remains affordable for the governments involved.
As critical as infrastructure is going to be in Djibouti, it is important to be sensitive about the benefits for the country, while at the same time delivering an economic solution to Ethiopia. The 550-km pipeline will be underground, following near the Ethioi-Djibouti railway corridor, therefore it will not interfere much with the local population. This poses the challenge of making sure to involve the community in related projects and services to prevent the project from being seen as something that just passes through, without benefiting local people. Finally, cross-border infrastructure projects can present significant challenges. However, the governments of Djibouti and Ethiopia have tremendous experience working together and have streamlined the development process.
How important is the increase in Djibouti’s fuel import capacity in terms of serving Ethiopia’s growing energy needs?
MENESES: Building additional refined product import infrastructure in Djibouti is a massive issue for Ethiopia, Djibouti and the region. Consumption of refined product in Ethiopia is growing by 10-15% annually, so if the country requires four ships a month in 2014, then it will be eight ships by 2018-20 and 16 ships by 2025-30. This level of growth in the region makes it essential that everything we are doing right now is catering to the long-term expansion of Ethiopia. Whatever Djibouti puts in place now won’t just be a “five- or ten year” solution. Instead it must be a solution that takes into account what is happening across the border in Ethiopia and developments in the future.
What are the prospects of expanding the pipeline to further markets in the region?
MENESES: We certainly see the opportunity that exists in expanding the pipeline beyond its current limits. If you look at the physical infrastructure in Djibouti, which manages one of the most efficient ports in East Africa, then also consider Ethiopia, where you have growth and a state-of-the-art rail network under construction, there are clear opportunities for further distribution. The pipeline’s termination point sits in Awash, which is practically in the centre of the country and which will see the Djibouti-Addis and the Mekele-southern Ethiopia railway pass through it. The pipeline could therefore be integrated with the rail system, taking the product from Djibouti to Awash in Ethiopia by pipeline, and then putting it on rail. At that point, it can be transported to the extremities of Ethiopia, after which tanker trucks can take it to locations further away.
A large portion of the refined products going to South Sudan is currently being shipped and collected in Djibouti by truck and transported to Ethiopia. The product is then processed from there. Logistically there is an opportunity to sup- ply Uganda and northern Kenya as well.
Northern Kenya is actually easier served from Awash than it is from Mombasa. Uganda has its own resources but no refining capacity at the moment. Until it starts producing its own product, Awash is probably in a better position to serve the Ugandan market than Mombasa. So with the possibility of expanding into Kenya, there are clearly opportunities for expanding the pipeline into other markets.
Read More from OBG
