Tanzania and Uganda agree to construct pipeline to Tanga

Source: Energy East Pipeline

Tanzanian leader President John Magufuli and Ugandan leader President Yoweri Museveni have agreed to construct a 1,120 km pipeline linking their countries and connecting the landlocked oil fields of Uganda to the Indian Ocean.  This was agreed after the recently concluded East Africa Community meeting held this week in Tanzania. The construction of the pipeline would create 15,000 jobs, and would cost around $4billion.

Mr. James Mataragio, managing director of the state-owned Tanzania Petroleum Development Corp said in a statement that the two government’s plan to “move very fast” to implement the project. He also added, “We have a meeting with our counterparts next week to execute the project. Mr. Mataragio indicated that the more details would come out next week.

Tanzania is competing with its neighbour Kenya for the pipeline that would transport the Ugandan oil deposits being developed by Total SA (France), Tullow Oil (UK) and China National Offshore Oil Corp (CNOOC). Total’s CEO Patrick Pouyanne, met President Yoweri Museveni last year December and stated that his company preferred the Tanzania route to the Kenyan one.

Museveni said Tuesday 1^st March  on his Twitter account that he had “discussed plans” about the pipeline with Magufuli and that it would employ 1,500 people.

Uganda has been considering the Tanzania route since last year October as the government felt the Tanzania route was cheaper as compared to the Kenyan route. The Kenyan route was projected to cost around $4.5billion.

The decisions on the design and financing of the pipeline and a refinery have repeatedly delayed the target date for producing Uganda’s first oil, after deposits were initially discovered a decade ago.

Bukenya Matovu, a spokesman for Uganda’s energy ministry, said he did not know whether the agreement with Tanzania was a final decision and that such a project would need a bilateral agreement. “Maybe that is one thing they talked about,” Matovu said by phone to Bloomberg media. He added that Uganda is interested in the Tanzanian route because “it is shorter and more secure in light of what is happening in Somalia”.

One of the routes proposed by Kenya would be through its northern territory to the coastal town of Lamu. Those areas are close to Somalia, where Alshabaab (Islamist militants) have been waging an insurgency against the government for the past decade. The al-Qaeda-linked fighters have also carried out attacks within Kenya.

So far, the Kenyan energy ministry is unaware of the Tanzanian agreement with Uganda, Permanent Secretary Joseph Njoroge said on Wednesday.

Another Kenyan government official said in a statement “Such a decision would not have been made without Museveni notifying Kenyan President Uhuru Kenyatta first because the two leaders have a close relationship”.

Estimates for the Tanzanian route, which would end at the north-eastern port of Tanga, are yet to be announced.

Source: Bloomberg, Daily Nation