Tanzanian President John Magufuli and his Ugandan counterpart Yoweri Museveni on Saturday laid the foundation stone for the construction of a crude oil pipeline from Hoima in Uganda to Tanzania’s Indian Ocean seaport of Tanga.
The 1,443-kilometer East African Crude Oil Pipeline (EACOP) worth 3.55 billion U.S. dollars will be able to transport 200,000 liters of oil per day once the project starts its operation. It will be the world’s longest electrically heated crude oil pipeline.
Authorities said construction of the EACOP is expected to commence early 2018, and is projected to take 36 months with the prospect of creating between 6,000 and 10,000 jobs.
Uganda’s current oil reserves stand at 6.5 billion barrels with 1.7 billion recoverable from the ground.
The event was witnessed by high-ranking officials, ministers, senior government officials from different institutions which are involved in the project.
Speaking at the historical event, which brought on board thousands of people from the two east African nations, Magufuli described the project as a landmark for swift development of the two countries and east African region at large.
In Tanga region alone, Magufuli said that more than 45,000 youth will benefit directly and indirectly with the implementation of the giant project, which upon completion is to completely change the outlook of the northerly seaport city of Tanzania.
He however challenged Tanzanian youth to explore opportunities available in the project, which touches on almost every sector.
“It is high time Tanzanians chipped in and benefited from the regional project, which has countless benefits,” he said.
Magufuli further lauded Uganda for choosing Tanga route for the crude oil pipeline, which will also be a source of revenue for the two east African nations.
Museveni described Tanga Port as key because of its geographical location and security.
He said that the project will also make fuel cheaper hence foster aviation industry, whereby regional airlines will get cheaper jet fuel.
Museveni further stated that the pipeline shows the importance of integrated decision-making for the two states.
Medard Kalemani, Tanzania’s Deputy Minister for Energy and Minerals, said the construction will be carried out by three firms, two from France and one from the United Kingdom.
According to Kalemani, on the Tanzanian side, the pipeline will pass into 8 regions namely Kagera, Geita Shinyanga, Tabora, Singida, Dodoma, Manyara and Tanga. It will also cover 24 districts and 184 villages.
Construction of the three-year project will commence next January, the deputy minister said.
According to feasibility studies, the Tanga route was deemed the cheapest for Uganda to transport its oil from the production point in Hoima to the international market.
Tanga route has convenient flat terrain, not interrupted by other activities, has lowest environmental challenges, and provides the shortest schedule for Uganda to see the first oil exports around mid 2020.
President Museveni made this remarks:-
“I thank our Tanzanian brothers and all stakeholders for organizing the colourful function at Chongoleani in Tanga, Tanzania.
This is a great event not just for the two countries but entire East Africa. This pipeline is not just for Uganda’s crude oil, it is an East African pipeline.
There are already hydrocarbon resources in Eastern Congo, Turkana and possibilities in Tanzania, Rwanda and Burundi. All these can be served by this pipeline.
In Uganda’s case we have 6.5 billion barrels of oil so far in 40% of the potential area. We shall have a refinery to produce petrol, diesel, aviation fuel, other petro-chemicals like plastics and associated gas for electricity and composite agriculture.
Tanzania already discovered large quantities of natural gas. Uganda needs this gas to process ore into steel for our big infrastructure projects. Imported steel makes our projects expensive. East Africa imports $1.3b worth of steel which must stop.
We thank the Tanzanian government for making the several concessions that ensured this pipeline project happens.
These include no corporate tax, no VAT, free corridor for pipeline, depreciation tax holiday for 20 years and possibility of acquiring shares in the pipeline.
These enabled us arrive at the cost of $12.2 per barrel, which even at the current world prices of oil ($50 per barrel) would still translate into a profit for us.
There will be other benefits from the project like supplies (cement, etc) and other activities that will compensate for and exceed the waived taxes.
East Africa has a spectrum of resources, however, it’s the human resource, the 170 million people, who are the greatest resource.
They are consumers, for example, East Africa today imports $33b worth of goods and services yet it’s exports are just $13.8b.
This is wealth we donate to other countries (EU, US, Japan, India, Russia etc), giving them jobs, bigger tax base, improving their technology, utilities and enhancing their prosperity in general.
The numbers also help us negotiate credibly with bigger markets of EU, USA, China, India, Russia. The human resource is therefore resourceful in the forward thrust of our economies.
I am therefore convinced that East Africa and certainly Uganda is unstoppable now. We have everything. Nothing will stop us from growth, development and transformation.
The other issue is our strategic security. In the last 500 years Africa suffered calamities. From slave trade, colonialism, neo-colonialism, genocide, instability, which all caused hemorrhage.
Political fragmentation aided these calamities. Our chiefs just watched or aided the Europeans to take slaves and colonise us. Our Independence leaders (Nkrumah, Madibo, Nyerere) guided us well.
Economic integration alone was not enough. Political federation is the therapy for our very survival. I have been a disciple of this gospel since the 1960s.
During the World War Two, it’s the highly industrialised but small countries like Holland, Czechslovakia, France that became Hitler’s first victims. It took the mighty states of Russia, USA to stop Hitler. We must then ask; what is East Africa’s insurance policy?
If Africa was a house, the fragmentation would mean the sitting room would be in one country, bedroom in another, courtyard in a third country, etc. It’s what makes execution of some of these projects difficult.
For example, we have been trying to build a power station on the Kagera but we had failed until recently Dr Magufuli agreed and we shall now build it.
I thank Tanzania for this positive collaboration on the pipeline and ask that we do more collaborations. I look forward to HE Magufuli’s visit to Uganda where he will lay a foundation stone in Hoima.
Finally, this town of Tanga is important to Uganda. In 1972, the Kikosi Maluum group of Ugandans under Milton Obote landed here from Sudan before moving to Handeni to set up base.
I also remember smuggling 14 guns through here to Tanzania during our Liberation struggle.
I thank our partners, Total E&P, CNOOC, Tullow for taking up this effort after our own technocrats had done the right work. We can have a win-win formulae with the partners if we engage honestly. I thank you.