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President Yoweri Museveni’s recent state visit to Tanzania was to rescue the crude oil pipeline project after Dar officials pushed to revise the low tariff that lured Uganda to prefer the southern route to the one through Kenya.
When President Museveni flew to Dar es Salaam on February 25 on the invitation of his counterpart John Pombe Magufuli to hold bilateral discussions, top on his list of priorities was the issue of harmonising the tariff that Uganda will pay for its oil to be transported through the port of Tanga in northern Tanzania.
Energy and Mineral Development Minister Irene Muloni was guarded, only saying that discussions between the presidents were around “issues of intergovernmental agreements to conclude” after “discussions with our partners about the incentive of the Tanzania route.”
But sources said the discussions in Dar es Salaam revolved around the tariff, and President Museveni returned to Kampala with a major victory after his visit ensured “the only impediment” that was still facing the $3.5 billion oil pipeline was removed.
“The only impediment was Tanzania. The ministers were becoming stubborn, insisting that Tanzania should get more from this pipeline. The president flew there, put on his Museveni magic and got the issue out of the way,” he said.
'Best tariff'
The incentive that among other things lured Uganda to choose the southern route is the tariff of $12.2 per barrel of oil that Uganda will pay to move its crude oil through Tanzania, which Ms Muloni says was “the best we got.”
Faced with competing strategic alternative of building an oil pipeline through Kenya or Tanzania, Uganda had already endured delays as the oil companies — which are now partners in the country’s oil development plan — haggled over their preferred pipeline route.
This process eventually ended in Kampala with its partner oil companies Total E&P, China National Offshore Oil Corporation (CNOOC) and Tullow opting for the southern 1445km Hoima-Tanga route, ditching the northern Hoima-Lokichar-Lamu port route.
The EastAfrican has learnt that in a bid to hijack the deal from Kenya, which also discovered oil in the northern region, Tanzanian officials were willing to throw sweeteners into the deal, which included free land and a fair tariff.
But, after getting the deal, Tanzanian officials started raising doubts over the project’s benefits to Dar es Salaam, citing a number of issues, such as the fact that in Tanzania land belongs to the government, so Uganda did not have to compensate any landowners, hence an increase in the tariff to a figure that The EastAfrican could not establish, was seen as a fair deal for Dar.
After the discussions, however, Tanzania relented and President Museveni welcomed the concessions offered by Dar to ensure that the pipeline project makes strategic and economic sense for both countries.
Key issues resolved
Upon President Museveni’s return from Dar, his presidential press unit released a statement touching on the five key issues that the Ugandan leader and his Tanzania counterpart discussed.
“We resolved that the key issues around this project have been resolved and we should ensure the contractor starts work,” the statement said.
Source: The East African
When President Museveni flew to Dar es Salaam on February 25 on the invitation of his counterpart John Pombe Magufuli to hold bilateral discussions, top on his list of priorities was the issue of harmonising the tariff that Uganda will pay for its oil to be transported through the port of Tanga in northern Tanzania.
Energy and Mineral Development Minister Irene Muloni was guarded, only saying that discussions between the presidents were around “issues of intergovernmental agreements to conclude” after “discussions with our partners about the incentive of the Tanzania route.”
But sources said the discussions in Dar es Salaam revolved around the tariff, and President Museveni returned to Kampala with a major victory after his visit ensured “the only impediment” that was still facing the $3.5 billion oil pipeline was removed.
“The only impediment was Tanzania. The ministers were becoming stubborn, insisting that Tanzania should get more from this pipeline. The president flew there, put on his Museveni magic and got the issue out of the way,” he said.
'Best tariff'
The incentive that among other things lured Uganda to choose the southern route is the tariff of $12.2 per barrel of oil that Uganda will pay to move its crude oil through Tanzania, which Ms Muloni says was “the best we got.”
Faced with competing strategic alternative of building an oil pipeline through Kenya or Tanzania, Uganda had already endured delays as the oil companies — which are now partners in the country’s oil development plan — haggled over their preferred pipeline route.
This process eventually ended in Kampala with its partner oil companies Total E&P, China National Offshore Oil Corporation (CNOOC) and Tullow opting for the southern 1445km Hoima-Tanga route, ditching the northern Hoima-Lokichar-Lamu port route.
The EastAfrican has learnt that in a bid to hijack the deal from Kenya, which also discovered oil in the northern region, Tanzanian officials were willing to throw sweeteners into the deal, which included free land and a fair tariff.
But, after getting the deal, Tanzanian officials started raising doubts over the project’s benefits to Dar es Salaam, citing a number of issues, such as the fact that in Tanzania land belongs to the government, so Uganda did not have to compensate any landowners, hence an increase in the tariff to a figure that The EastAfrican could not establish, was seen as a fair deal for Dar.
After the discussions, however, Tanzania relented and President Museveni welcomed the concessions offered by Dar to ensure that the pipeline project makes strategic and economic sense for both countries.
Key issues resolved
Upon President Museveni’s return from Dar, his presidential press unit released a statement touching on the five key issues that the Ugandan leader and his Tanzania counterpart discussed.
“We resolved that the key issues around this project have been resolved and we should ensure the contractor starts work,” the statement said.
Source: The East African
