Tanzania, Total sign agreement for East African Crude Oil Pipeline

What you need to know:

  • The signing followed three weeks of intensive negotiations between senior government technocrats led by the AG and representatives of Total

Arusha. Tanzania and Total oil company yesterday signed an agreement that will pave the way for the construction of a crude oil pipeline from Uganda to the Tanga port.

Implementation of the $3.5 billion East African Crude Oil Pipeline (Eacop) project is scheduled to start in February next year, lasting for three and a half years.

Attorney General Adelardus Kilangi signed the Host Government Agreement (HGA) for Tanzania government while Nicolas Terraz penned for Total oil giant.

“This is an important milestone towards the implementation..it represents yet another successful step in the process,” Prof Kilangi said.

The signing followed three weeks of intensive negotiations between senior government technocrats led by the AG and representatives of Total.

The 1,447 kilometre pipeline will be used for transportation of crude oil from Hoima in Uganda to the Tanga port for export overseas.

Yesterday’s pact with Tanzania followed the initialization of another HGA agreement between Total and Uganda on September 11th after three months of negotiations.

Negotiations for the Tanzanian HGA covered, among others, project authorizations, land rights, local content, health safety and environment and labour standards. “Today’s conclusion is a sign of a conducive environment for investment. Investors should be assured the environment is much more conducive now,” he said.

The pipeline, two thirds of which will pass through Tanzania,will generate at least 10,000 jobs and tax revenue and non-tax revenues amounting to billions of shillings.

Total purchases for the project will cough in Sh1.7 trillion while transportation of goods will generate Sh496 billion and annual salaries Sh294 billion.

The permanent secretary in the ministry of Energy Ms Zena Saidi said the negotiations centred on legal and contractual framework. “The negotiations were tough but we agreed on conditions under which EACOP) will be built, operated and the local content,” she told an audience at a hotel room.

Mr Terraz, Total’s Head of Africa Division said the negotiations were transparent and that the oil giant will ensure clauses of the agreement were implemented to the letter.

The government team included the Governor of the Central Bank Prof Florens Lugoa, several permanent secretaries, chief executives from the parastatal and the business corporates.

Tanzania and Uganda agreed in March 2016 that a pipeline to transport crude oil from the Lake Albert basin in west Uganda to the markets overseas be routed through the Tanga port. An agreement to the letter was signed by the two neighbouring countries in May 2017 followed by the laying of a foundation stone at the Tanga port by presidents John Pombe Magufuli and Yoweri Kaguta Museveni in August the same year.

EACOP is expected to unlock East Africa’s potential by attracting investors to explore opportunities in the region.

It is projected the project will result to over 60 per cent increase in Foreign Direct Investment (FDI) in Tanzania and Uganda during the construction phase.