Tanzania, Uganda finalise key agreements on pipeline project

Final pact clears way for work on pipeline to start

What you need to know:

  • The stage is now set for the construction of a $3.5 billion 1,443km oil pipeline from Hoima in Uganda to the port city of Tanga to commence following the signing yesterday of the second and final Host Government Agreement

Dar es Salaam. All is now set for actual construction of the $3.5 billion pipeline project after lengthy discussions and about five agreements among the partners were finalized yesterday.

Uganda having signed an agreement with the investors last month, yesterday was the Tanzanian government’s turn to finalise an agreement with EACOP, an event witnessed by President Samia Suluhu Hassan and her Uganda counterpart, Yoweri Museveni, at a ceremony held at State House in Dar es Salaam.

The East African Crude Oil Pipeline (EACOP) project is set to bring to life a 1443km-long heated oil pipeline from Hoima in Uganda to Tanga in Tanzania.

This will not only be the world’s longest heated crude oil pipeline; it will also be the biggest joint investment in the East African Community bloc’s history.

Yesterday’s agreement, which is the key element that was being awaited to allow construction to begin, comes with great benefits for Tanzanians.

Speaking at the event, President Hassan said the crude oil project would indeed help increase employment for Tanzanians, as well as stimulate joint oil exploration in the region, noting that Tanzania was likely to find oil at Lake Eyasi.

“Out of the 1,443-km pipeline 1,147km will pass through Tanzania in eight administrative regions and 24 districts.

“More jobs will be create, as we owe Tanzanians more than 7 million jobs over the next five years, so this project will increase employment,” the Tanzania President said.

Uganda has discovered the presence of 6.5 billion barrels of oil, and there’s no doubt it will increase.

Currently, she said, the discovery was only 40 percent while the remaining 60 percent was being worked on.

In the project, Tanzania Petroleum Development Corporation (TPDC) will hold a 15 percent stake, while the country will get 60 percent of the tax revenues.

“It will stimulate exploration of oil and gas activities in our East African region. We hope to find oil through Lake Eyasi while the DRC also has the prospect of finding oil and the infrastructure that will be used is the EACOP.

“All this will be using this project as a transportation corridor,” said President Hassan.

“We now need to work together to ensure that the remaining components (Final Investment Decisions) are completed so that, by 2025, oil can be exported,” added President Hassan.

For his part, Uganda President Yoweri Museveni reminded Tanzanians and Ugandans not to be content with the crude oil project, but to use the income from the project to bolster other economic sectors.

“Other sectors such as commercial agriculture, industry, will now be assisted by the benefits from this temporary project, but agriculture remains a sustainable venture as well as tourism, so let’s use these limited resources to protect sustainable resources,” advised President Museveni.

He said the money from the project should be used to finance other projects that are more sustainable so that when oil is finished, the countries will have grown to higher development levels.

Mr Museveni also noted that Uganda also needed gas for the steel industry, to provide oxygen in the metal layers and other uses. “Therefore, the created corridor can be used to lay a gas pipeline from Tanzania to help the Great Lakes countries.”

Tanzania Energy Minister Medard Kalemani said that the project will create employment for more than 10,000 Tanzanians during construction, and 1,500 after oil transportation starts toflow along the facility.

According to the minister, 60 percent of all pipeline revenue will be go to Tanzania, while Uganda will receive 40 percent.

“In terms of tax revenue for all 25 years of the project, Tanzania will receive $290 million in direct taxes and since the country’s land will be used, then we will be paid revenue of $59 million,” Dr Kalemani said - adding that crossing the port will peg $73 million.”

Mentioning the five steps to be taken in the implementation of the construction of the project, Dr Kalemani said what will start is the construction of the pipeline itself 1443km from Hoima to Tanga-Chongeoleni.

“Secondly, there will be eight oil pumping stations. Two will be built in Uganda, and six in Tanzania for pumping and reducing fuel speed,” he said.

Dr Kalemani said pipeline’s lubricant facilities would be built because oil contains wax so 26 will be built in Tanzania and seven in Uganda.

He said the next step would be to build 76 valve shutters, 53 of them built in Tanzania and 23 in Uganda.

“There will be construction of five oil storage tanks in Tanga where each tank will be able to fill 500,000 barrels so it will be able to store about 2,500,000 million barrels of oil,” said Energy Minister Kalemani.

Stakeholders in this project include Total Company in France (with 62 percent stake); TPDC (15 percent); Uganda (15 percent), and CNOOC: eight percent.