Tanzania-Uganda oil pipeline deal to be sealed next week

18Apr 2016
Felister Peter
The Guardian
Tanzania-Uganda oil pipeline deal to be sealed next week

UGANDA has officially chosen the Tanga route through Tanzania for its envisaged crude oil pipeline project, the Permanent Secretary in the Tanzanian Ministry of Energy and Minerals, Prof Justus Ntalikwa, has confirmed.

Ministry of Energy and Minerals, Prof Justus Ntalikwa

The formal announcement is expected to be made at a summit of regional leaders next week after a protracted round of negotiations involving officials from both Tanzania and tender rivals Kenya in the Ugandan capital Kampala.

Speaking to The Guardian in Dar es Salaam yesterday, Prof Ntalikwa said the official signing of the project contract is a priority item on the agenda of the east African northern corridor infrastructure heads of state summit scheduled for April 21-22.

Ugandan President Yoweri Museveni is expected to host his Kenyan and Rwandan counterparts Uhuru Kenyatta and Paul Kagame respectively for the northern corridor infrastructure summit.

According to the PS, the negotiations in Kampala began at technical committee level for all three countries involved - Tanzania, Kenya and Uganda - followed by meetings of the respective energy ministry PSs and finally the energy ministers of all three countries.

Although Tanzania’s argument for the pipeline to access the Indian Ocean through Tanga instead of Kenya’s Lamu port finally appeared to win the day, the Kenyan representatives to the talks are said to have refused to accept the resolutions in favour of Tanzania, thereby agreeing to disagree at the end of the talks, Prof Ntalikwa said.

He said when he and his fellow PSs from the three countries’ energy ministries met to review the technical teams’ suggestions, Tanzania’s proposal emerged best.
“We had all the reasons to win the deal. The Tanga route has fewer challenges compared to Kenya”, said the PS, noting that it is normal procedure for key issues like this to be granted final approval at the EAC heads of state summit.

He said the only major challenge that Tanzania is likely to face during construction of the pipeline is crossing the Kagera River, which has a small width (60 meters).
The wrangle between Tanzania and Kenya over the Ugandan oil pipeline project has been rumbling since the French oil company Total announced it was taking Tanzania’s side.

Total East Africa - one of the three major financing partners – has assured President Magufuli of the availability of funds to start the project immediately, if necessary.

According to Total East Africa vice president Javier Rielo, around $4 billion has already been set aside for the project which will link oil fields in Uganda’s Lake Albert to Tanga port and is expected to create up to 1,500 direct and 20,000 indirect jobs.

The pipeline will wind its way from Tanga to Uganda through Singida and Kagera regions, and upon completion will be able to transport up to 200,000 barrels of oil per day, according to the project blueprint.

The project is expected to increase Foreign Direct Investment (FDI) to Tanzania by more than 50 per cent per annum.

So far the investors are working on the best deal to transport to Tanga an estimated 6.5 billion barrels of oil believed to be accessible in Lake Albert. Already 1.4 -1.7 billion barrels have been confirmed as recoverable and available for transportation.

Uganda expects to export its crude oil to the world markets by 2018. Security concerns over the Somali-based terrorist group Al-Shabaab, plus the rough Rift Valley terrain and land acquisition hurdles, are among disadvantages that appear to have ultimately cost Kenya the potentially lucrative pipeline deal.