Parties in the recently signed Uganda pipeline deal have three documents to complete to begin the construction of the East African Crude Oil Pipeline (EACOP) scheduled to start this month, a move that will open opportunities for the East African because of the huge materials the project needs.
These documents, Tanzania Petroleum Development Corporation (TPDC) that was quoted in Tanzania press include the signing of Host Government Agreement (HGA) between the government of Tanzania and investors, concluding the percentage of stake in ownership of the firm that the country (Tanzania) must take in the project and establishing the EACOP as a company.
President Samia Suluhu Hassan and her Ugandan counterpart Yoweri Museveni recently witnessed the signing of the EACOP in the Tripartite Project Agreement at Entebbe State House paving way paving the way for the construction of a 1,440-km crude oil pipeline from Uganda’s Albertine region to Tanzanian seaport city of Tanga.
TPDC’s managing director James Mataragio told The Citizen, a Tanzanian-based daily, that after signing of the HGA between Uganda and investors on April 11, 2021 in Entebbe, the same would be signed between Tanzania and investors before the end of this month.
“The HGA between investors and the government of Tanzania has been already discussed, agreed and initialed, and the signing date will be announced,” he was quoted.
According to him, Uganda through the Uganda National Oil Company (UNOC) holds 15 percent and China National Offshore Oil Corporation (CNOOC) holds eight percent of the total shares while Total as the principal investor will take the remaining shares.
“The construction of the crude oil pipeline is expected to begin this month and EACOP Company will take the responsibility for issuing various tenders regarding the project. The company will come into operations soon after signing the HGA,” he noted, adding that the Shareholder Agreement for Total, CNOON, UNOC and TPDC has already been signed.
Other agreements which have already been signed by all parties include: Land Lease Agreement for Priority Areas, Land Lease Agreement for Chongoleani, Marine User Right Agreement for EACOP company, Chongoleani Marine Facility Agreement and Land Lease Agreement for Pipeline Corridor.
Dr Mataragio added that the EACOP Company will pay Sh20.45 billion as compensation to people whose land will be taken for implementing the project.
“The Pipeline corridor area has a total size of 9,223.23 acres on the Tanzanian side, with 9,122 people who will leave their lands after being compensated,” he noted.
A total of 350 kilometers of roads at different rates will be constructed within and out of the project area. The roads are estimated to cost $16 million (Sh36.94 billion).
The construction will now open new opportunities for Mombasa and Dar es Salaam port that are expected to handle enormous volumes of materials needed for the pipeline construction and the road infrastructure.
Up to 12 million tonnes of equipment and materials will be imported and delivered to the Lake Albert region in western Uganda where most oil production activity will take place, according to industry experts.
Being the largest transit market for Mombasa port, it is estimated that up to 350 truckloads of materials will be moved by road every day through Kenya on the northern road corridor and Tanzania on the southern corridor to deliver the equipment once the work begins.
In 2007, it was estimated that the oil industry would inject anything between US$8 billion and US$20 billion over three to five years. This is a huge chunk of money to be pumped into an economy whose annual budget was about US$7.5 billion. Experts said that close to 60% of this money would be spent on logistics or procurement and transportation of materials.
Uganda remains a key trade partner for Kenya as its exports and imports pass through Mombasa, and during a visit by President Yoweri Museveni in 2018, Kenya offered Uganda a piece of land in Naivasha to put up a dry port for its cargo.
Inland Container Depot (ICD) at Naivasha has positioned itself as an essential node; connecting transit road and railway networks, with a marshalling area having the capacity to hold over 700 trucks. The 45,000-square-meter facility can handle over two million tonnes of cargo annually.
By handling cargo destined for Uganda, Rwanda, South Sudan, Ethiopia, Burundi and the Democratic Republic of Congo, the facility reduces the transit distance for the Member States by more than 570km.
The ICD at Naivasha was commissioned in May 2020 to enhance the throughput at the port of Mombasa, decongest the Port of Mombasa and the ICD in Nairobi, as well as fast clearance of cargo and improved container handling.
