THE Government is seeking sh31.3b to compensate persons in the gazetted Kenya-Uganda oil pipeline corridor.
The energy and mineral development state minister, Peter Lokeris, said the project had stalled for a number of years due to lack of funds to compensate the affected people.
Appearing before the natural resources committee of Parliament yesterday, Lokeris said constructing the pipeline was needed to transport refined oil products into Uganda and neighbouring countries as a medium-term strategy.
He asked Parliament to allocate sh31.3b in the 2011/2012 budget as compensation to the landowners in the corridor.
Lokeris also cited some of the challenges affecting sector activities such as the difficulty in acquiring land for infrastructure, mineral development, high power tariffs, high power thefts and low access to modern energy forms among rural households.
He observed that acquiring land delays project development and results in high investment costs as the public hikes the cost of land.
The minister attributed the high power tarrifs to the costs of the current power generation mix which is dominated by thermal power, but noted that the completion of Karuma and Isimba hydro-power plants would add up to cheaper forms of power.
The committee was also informed that the first drilling exercise for oil would start in July 2011, with a refinery capable of producing 20,000 barrels per day.
“Tullow oil is to carry out a pre-test exercise on the oil for three months starting July. The oil will be used in processing plants. The earlier we do it the better for our country,” Lokeris said.
Committee members tasked the ministry officials to explain the availability of fuel in the Government’s reserves and the steps they had put in place to address the increasing fuel prices.
Paul Mubiru, the director in the ministry of energy and mineral development, said the ministry had no authority to give a statement on the increasing fuel prices.