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Uganda and Tanzania sign key oil pipeline agreement

By Vision Reporter

Added 14th September 2020 09:55 AM

The Presidents also agreed that each state party commences negotiations of all pending project agreements with immediate effect

Uganda and Tanzania sign key oil pipeline agreement

Presidents Yoweri Museveni and John Pombe Magufuli put pen to paper on the agreement. PPU Photo

The Presidents also agreed that each state party commences negotiations of all pending project agreements with immediate effect

The governments of Uganda and Tanzania have signed the intergovernmental agreement on the pipeline system of the East Africa Crude Oil Pipeline (EACOP) project.

The signing ceremony was presided over by President Yoweri Kaguta Museveni and Tanzania's John Pombe Magufuli at Chato district, in the Geita region of Northern Tanzania.

On arrival at Chato Airfield on Sunday, Museveni who was on a one-day working visit to Tanzania, was received by his Tanzanian counterpart.

Others at Chato Airfield to receive him were energy minister Mary Goretti Kitutu, Attorney General William Byaruhanga and Uganda's Ambassador to Tanzania Richard Kabonero among others.

Kitutu and Tanzania's energy minister Medad Kalemani jointly signed the agreement between Uganda and Tanzania.

The agreement has now cleared the way for the construction of 1,445km long pipeline that will transport crude oil from Uganda's oil fields in Hoima, to the port of Tanga.

Speaking at the event, Museveni said that the project has to begin with immediate effect for the people of the two countries to start enjoying the fruits endowed resources.

"Since we discovered the oil in Uganda, there has been a lot of debate and negotiations on terms to be applied, it's good that all these have come to an end and now, we are ready for the project," he said.

According to President Museveni, to begin with, the project is set to exploit 6.5 billion barrels of oil which is 40% of the total oil in the Albertine oil zone.

"The oil will be explored from the area covering 40 percent of the total area that has been discovered to have that natural wealth. We have decided to start with it since it's just the new area of investment," Museveni explained.

He revealed that there had been long debates and negotiations between Uganda and other stakeholders on the amount of tax and other expenses, which delayed the commencement of the project.

To allow the timely commencement of the project, Museveni said that Uganda had to forego a total of $800m in revenue that was to be collected from the project for the next 25 years.

"Since it's a new area, we decided to use the small area from where we will also be able to learn more for the sake of doing better in the next project," he said.

According to Museveni, the project will also make fuel cheaper hence fostering the aviation industry, whereby regional airlines will get cheaper jet fuel.

In his remarks, President Magufuli revealed that Tanzania will earn sh7.5trillion and create more than 15,000 jobs over the next 25 years, or more from the project.

Magufuli said that the project implementation will open up the region for further opportunities for trade and in turn fast track socio-economic development.

He commended President Museveni, the government, and the people of Uganda for working closely together to have this project reach this stage.

The agreement on the pipeline construction comes a few days after the government of Uganda and Total concluded and signed the host government agreement for the EACOP project on September 11, 2020.

After the signing of the host government agreement, Museveni promised to get in touch with Magufuli, to resolve other pending issues, especially concluding the host government agreement in Tanzania, hence his one-day working visit.

The Tanga route, according to feasibility studies, was deemed the cheapest for Uganda to transport its oil from the production point in Hoima to the international market. It has a convenient flat terrain, not interrupted by other activities, as well as the lowest environmental challenges.

According to a joint communiqué read out by the Tanzanian Attorney General Adelardus Kilangi, the two heads of state agreed and directed that each state party expeditiously concludes the host government agreement with the EACOP project company.

The Presidents also agreed that each state party commences negotiations of all pending project agreements with immediate effect and expedite the implementation of the EACOP project.

Museveni and Magufuli underscored the need to foster the welfare of the people of their respective countries in accomplishing the East African Community integration as was conceived by the founding fathers of the two nations.

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