Uganda and Tanzania have signed the intergovernmental agreement on the 1,445km long pipeline system of the East Africa Crude Oil Pipeline (EACOP) project.
The pipeline will transport crude oil from Uganda’s oil fields in Hoima to the port of Tanga. The pipeline will pass through Tanzania.
The signing ceremony was presided over by President Yoweri Kaguta Museveni and Tanzania’s John Pombe Magufuli at Chato district in the Geita region of Northern Tanzania.
It follows a similar agreement that Uganda and Total signed on the pipeline last week.
Ugandan President, Museveni, arrived Tanzania on a one-day working visit on Sunday. He was received by his counterpart and the country’s energy minister, Mary Goretti Kitutu; Attorney General William Byaruhanga and Uganda’s Ambassador to Tanzania Richard Kabonero among others.
Kitutu and Tanzania’s energy minister Medad Kalemani jointly signed the agreement between Uganda and Tanzania.
Uganda discovered crude oil reserves estimated at 6 billion barrels in the Albertine rift basin near the border with the Democratic Republic of Congo in 2006. However, commercial production was delayed partly because of a lack of infrastructure.
The agreement has now cleared the way for the construction of 1,445km long pipeline that will transport crude oil from Uganda’s oil fields in Hoima, to the port of Tanga.
Speaking at the event, Museveni said that the project has to begin with immediate effect for the people of the two countries to start enjoying the resources.
He added that the project is set to exploit 6.5 billion barrels of oil which is 40% of the total oil in the Albertine oil zone.
Museveni revealed that there had been long debates and negotiations between Uganda and other stakeholders on the amount of tax and other expenses, which delayed the commencement of the project.
To allow the timely commencement of the project, Museveni said that Uganda had to forego a total of $800m in revenue that was to be collected from the project for the next 25 years.
“Since it’s a new area, we decided to use the small area from where we will also be able to learn more for the sake of doing better in the next project,” he said.
According to Museveni, the project will also make fuel cheaper hence fostering the aviation industry, whereby regional airlines will get cheaper jet fuel.
In his remarks, President Magufuli revealed that Tanzania will earn sh7.5trillion and create more than 15,000 jobs over the next 25 years, or more from the project.
Magufuli said that the project implementation will open up the region for further opportunities for trade and in turn fast track socio-economic development.
He commended President Museveni, the government, and the people of Uganda for working closely together to have this project reach this stage.