Kenya is set to lose out after Uganda and Tanzania signed a $3.5bn (Ksh379 billion) deal to construct a crude oil pipeline, experts say.
The 1,445km (897) miles East Africa Crude Oil Pipeline (EACOP) project will run from Hoima in Uganda to Tanga in Tanzania.
It is a deal that all but ends a similar initiative agreed between Uganda and Kenya.
Despite this, global risk consultancy Control Risks, says that it sees Kenya stepping up its efforts to make its own pipeline a reality – with Ethiopia and South Sudan as part of the wider East African northern corridor transport project.
The Uganda-Tanzania pipeline will be 24 inches (61 cm) in diameter and have a planned throughput capacity of 216,000 barrels of crude oil per day.
Uganda will pay Tanzania $12 (Ksh1,300) for every barrel flowing through the pipeline, earning the country some $2.6m (Ksh282 million) every day over a planned output period of 25 years.
Over the period Tanzania is expected to eventually earn $3.2bn (Ksh347 billion) in total tariffs as well as create 18,000 jobs.
The EACOP project is, however, expected to face several challenges including environmental concerns and community land compensation, issues that have been already highlighted by civil society organisations including Oxfam.