Ikulu says Uganda-Tanzania oil pipeline is a done deal

23Mar 2016
Lydia Shekighenda
The Guardian
Ikulu says Uganda-Tanzania oil pipeline is a done deal
  • Despite Kenya's maneuvrings, Magufuli's office confirms that agreement on construction of the HoimUganda-Tanga crude oil pipeline is a conclusive contract

PRESIDENT John Magufuli's office stated categorically yesterday that the agreement entered between Uganda and Tanzania for the construction of a crude oil pipeline linking the two neighbouring countries is conclusive despite ongoing jostling by Kenya for the project.

Uhuru Kenyatta and Dk. John Magufuli

The assertion by State House comes amid desperate maneuvrings by high-level officials in Kenya to try to snatch the major infrastructure project from Tanzania.

Gerson Msigwa, acting director for communications in the president's office said the deal reached by Magufuli and his Ugandan counterpart, Yoweri Museveni, for the construction of the pipeline was an iron-clad agreement.

“The two presidents sealed a conclusive agreement on the project and handed over the implementation work to the experts to allow other activities to proceed," Msigwa said.

"The (state-run) Tanzania Petroleum Development Corporation (TPDC) and the Ministry of Energy and Minerals are currently carrying out some activities in relation to this project.”

The agreement between Magufuli and Museveni was followed up by the signing of a project implementation plan in Arusha between energy and minerals ministers from the two countries.

Uganda's Energy and Minerals Development Minister, Irene Muloni, said at the signing ceremony that her country was keen to fast-track implementation of the Uganda-Tanzania crude oil pipeline project.

Msigwa said Tanzania beat Kenya in the race for the pipeline because of its geographical position and it offered a favourable route.

“Tanzanians are eagerly waiting for the project to kickoff soon due to its huge economic significance, which includes job creation. The project is expected to create up to 1,500 direct and 20,000 indirect jobs,” he said.

He said executives from Total have assured President Magufuli that they have already raised $4 billion needed for the construction of the pipeline via a preferred southern route to Tanzania.

The Kenyan and Ugandan presidents held talks on Monday about which route to choose for the oil export pipeline that Kenya wants to go through its territory rather than Tanzania, but discussions did not reach any final deal.

In a statement after Monday's talks in Nairobi, Uganda and Kenya said they would meet again in two weeks in Kampala, giving technical teams time to assess the two routes and factors such as which is cheaper and easier to build.

France's Total, which has a stake in the Ugandan fields, has previously raised security concerns about the Kenyan route. Sections of the Kenyan pipeline could run near Somalia, from where militants have launched attacks on Kenya.

Britain's Tullow Oil, which has stakes in both Ugandan and Kenyan fields, is reportedly pressing for the Kenyan route, saying it will be cheaper for Uganda as costs will be shared between more producers. China’s CNOOC also has a stake in Uganda.

Analysts said the dispute over the route of the proposed oil pipeline was straining relations in east Africa.

The pipeline’s route appeared to have been settled in August last year after Museveni and Kenyatta signed a deal for a pipeline from Uganda’s oil fields in the Lake Albert basin to Kenya.

Kenya wants the pipeline to be the anchor for a $23 billion infrastructure corridor.

WHY TANZANIA IS A BETTER ROUTE THAN KENYA

Total has said it is concerned about the proposed northern route through Kenya because of the potential for attacks on the pipeline by Somalia-based al-Shabaab Islamist militants.

According media reports from Kenya, a study by Tullow Oil and CNOOC which warned of possible delays in the completion of the oil pipeline through a Kenyan route was at the centre of talks between Kenyatta and Museveni on Monday.

Tullow Oil and CNOOC had carried out a research, whose findings warned Uganda against going ahead with its plan to use the Kenya route.

Sources said the study warned that Kenya has a long history history of protracted land compensations, which could delay the construction of the pipeline.

The study had also stated that the Lamu Port was yet to be built and warned that it might not be completed by 2018, when Uganda will be ready to start exporting its crude oil.

On the other hand, Tanzania already has a port at Tanga, which could be effectively expanded at a relatively faster speed to act as a hub for the export of Ugandan oil to international markets.

Experts said Tanzania has experience in land compensation to make way for major projects, citing the successful construction of the Mtwara-Dar es Salaam natural gas pipeline and the recently concluded land acquisition for a liquefied natural gas (LNG) plans in Lindi region.

In Tanzania, ownership of land is vested in the president, which gives him powers to issue a decree and acquire land for the construction of the pipeline.

In contrast, land in Kenya is not vested in the president, hence any pipeline construction project through Kenya would face complicated and potentially costly private land acquisition procedures.