STAKEHOLDERS in the envisaged 4-billion- US dollar crude oil pipeline from Kabale in Uganda to Tanga Port in Tanzania are finalising drafting contracts to establish a company that would oversee implementation of the mega project, it has been learnt.
ALVAR MWAKYUSA - Daily News
Parties in the scheme include the governments of Tanzania and Uganda as well as Total E&P of France, Tullow Oil of the United Kingdom and China National Offshore Oil Corporation (CNOOC).
The Managing Director of the Tanzania Petroleum Development Corporation (TPDC), Dr James Mataragio, told the ‘Daily News’ at the ongoing 40th Dar es Salaam International Trade Fair (DITF) that the company will be known as Pipeline Company (PIPECO).
According to the TPDC boss, PIPECO will be charged with seeking funds, procuring goods and services and operating the oil pipeline.
“In essence the project has already started but physical work will kick-off after final investment decision is reached by mid next year,” he explained.
He added; “The envisaged company will have to seek 60 per cent of the funds to implement the project while the involved stakeholders will foot the remaining 40 per cent.”
Tanzania will charge Uganda 12.5 US dollars for a barrel of oil while the former has also been invited to own 8 per cent shares in an oil refinery to be set up in Hoima to refine oil for countries in the East African region.
Asked whether Tanzania had plans to set up a refinery in Tanga, Mr Mataragio said the country is not considering setting up the facility at the moment as doing so will render the refinery in Uganda redundant.
“Uganda plans to construct the processing plant to refine oil for the East African market and thus setting up a similar facility in Tanzania is not feasible at the moment. We may consider the plant in the future,” Dr Mataragio stated.
He pointed as well that the Kabale-Tanga pipeline was among flagship projects being undertaken by the TPDC. Uganda chose the Tanzanian route for the oil pipeline in April, this year, amid stiff competition from Kenya, which also wanted it to be routed to yet to be constructed Lamu Port in North-Eastern Kenya.
The pipeline through Tanzania will be of benefit not only to Uganda and Tanzania but other countries in the region such as Kenya, South Sudan, Rwanda, Burundi and the Democratic Republic of Congo (DRC).
The envisaged 24-inch conduit to cover 1,403 kilometres from Kabale to Tanga is expected to convey 200,000 barrels of crude oil per day for exports. It is expected to create 15,000 jobs during its execution after which upon completion it will employ between 1,000 and 2,000 people.
It will pass through Kagera, Geita, Shinyanga, Tabora and Singida to Tanga. Uganda has so far discovered 6.5 billion barrels of the precious liquid along the Lake Albert basin. The first finding was made by Hardman Resources in 2006 which was later acquired by Tullow Oil.
At present, three companies own 33.3 per cent each of the oil fields and they include Total E&P, Tullow Oil and CNOOC.
The companies also plan to construct an oil refinery to process 60,000 barrels per day to cater for demand of petroleum products in East Africa while between 200,000 and 600,000 barrels will be transported in crude form through the pipelines for exports outside the EAC.
