Plans for construction of the East African Crude Oil Pipeline (EACOP) are inching closer to the crucial stages as Tanzania and Uganda, agreed to complete and sign a Host Government Agreement for the project by end of June this year after week-long negotiations between ministers of the two countries in Kampala last week.
The two East African Community member states agreed to further fast-track their plans for the construction of the 3.5 billion US dollars project that will enable Uganda to export crude oil from its vast reserves in the Lake Albert Basin to overseas market through Tanga port.
The crude oil pipeline which will become the world’s longest heated crude oil export pipeline upon completion, is expected to be completed by the year 2020, when Uganda is scheduled to start oil production.
Tanzania and Uganda agreed to further fast track construction plans for the pipeline at the meeting that involved Ministers of Energy from the two countries together with their Attorney Generals who met for another round of negotiations over the project as per the Inter-Governmental Agreement signed between the two governments last year.
Tanzania re-assured Uganda about her readiness to oversee the construction of the pipeline that will start from the refinery based in Hoima to reach the terminal on the coast of Tanzania.
The assurance was given by the Minister for Constitution and Legal Affairs, Prof Palamagamba Kabudi at the meeting hosted by Uganda’s Energy and Mineral Development Minister, Irene Muloni and also attended by her counterpart in Tanzania, Dr Medard Kalemani.
Reports from Uganda said there were concerns raised between the two parties that they seemed to be moving behind the schedule on the remaining legal requirements to move the project to the next stage.
One of the legal requirement is the need to sign the Host Government Agreements which has been pending since last year even when the two countries have gone ahead to lay the foundation stones for the project.
The meeting in Kampala was held amid reports that Uganda government had announced that production on a major oil pipeline may see a delay as its investors hold out for a higher tariff, beyond the $12.20 per barrel tariff originally agreed upon.
We see the agreements reached in Kampala mark another important milestone to crude pipeline project which has strategic importance to Uganda in terms of securing greater independence for domestic market as well as a reduction in its oil import.
For the time being Uganda’s crude oil reserves are estimated at 6.5-billion-barrels-strong, and promise to bring the East African country prosperity.
The crude oil pipeline is also of vital importance to Tanzania during construction works in terms jobs and business opportunities that will be availed and after construction in terms of revenue that the government is going to earn through tariff set earlier not to exceed 12.20 US dollars per barrel.