President Yoweri Museveni and his Tanzania counterpart Joseph Pombe Magufuli on Saturday commissioned the construction of the 1,445km-long East African crude oil pipe line from Hoima district in Uganda to the Tanzanian port of Tanga.
The two leaders used the occasion to underscore the need for fast integration of the East African community so as to ease the joint planning, financing and implementation of major projects that are crucial for the development and transformation of the region.
The heated crude oil pipe line, the longest of its kind in the world, will cost $3.5 billion and will be completed by 2020 making Uganda join the ranks of oil producing countries. The pipeline works will be undertaken by Total E&P, CNOOC and Tullow Oil together with the two governments of Uganda and Tanzania. The pipe line will on completion carry 216,000 barrels of crude oil for export daily.
Speaking during the ceremony President Museveni said because of the numerous concessions from the Tanzanian government, the cost of delivering a barrel of oil from Hoima to Tanga will be $12.2 per barrel, making Uganda’s crude oil propfitable even at today’s rate of $50 per barrel.
“On behalf of Ugandans I thank President Magufuli and our Tanzanian brothers for giving us the following concessions on the pipe line. There will be no pay transit tax, no Value Added Tax, no corporate income tax, gave us 20 years depreciation tax holiday, granted us a free corridor where the pipe line passes and promised to buy shares in the pipe line,” President Museveni said.
Museveni saluted the private partners in the oil pipe line project (Total, CNOOC and Tullow) and assured them that with the right working relationship, they will together end in a win-win situation.
President Magufuli thanked President Museveni and his government for trusting Tanzania and choosing the Tanga route for the project despite the other options available.
He said it was a vote of confidence to the Tanzanian people. He said that Tanzania had to sacrifice by offering several concessions to Uganda just like it did in struggle against dictatorship but said that Tanzania was certain they will greatly benefit from the pipe line project.
“This pipeline could have gone to a shorter route of 900kms but Museveni has supported us. We had to make concessions for our Ugandan brothers like we have previously done to liberate them,” he said.
“We had to sacrifice but we shall also benefit. During construction, direct jobs will be between 10,000 to 15,000 while temporary ones will peak to 30,000. Already hotels are benefiting as guests come here and we shall set up a cement factory here, one of the biggest in East Africa,” said Mr Magufuli.
He said with the oil coming to Tanga, Tanzania would now buy crude oil from Uganda instead of incurring high exports of importing from the Arab world, while indicating that Uganda would also find it cost-effective selling to Tanzania.
“Oil was discovered by Ugandan experts. They have done it. They will come to Tanzania to check our hydrocarbons in Tanganyike—where there are traces of oil. If we find it, they will bring their skills to Tanzania,” he said amidst applause from the excited crowd.
QUICK FACTS ABOUT EAST AFRICA CRUDE OIL PIPELINE
- At 1,445kms, it will be the longest electrically-heated oil pipeline in the world.
- Uganda will host 296kms of the pipeline, while the remaining 1,149kms will be in Tanzania.
- In Uganda, the pipeline will run through eight districts and 24 sub-counties. In Tanzania, it will go through eight regions and 24 districts.
- It will be a buried pipeline, with 1.2 metres of it beneath the ground.
- Its estimated cost is $3.55 billion while constriction should last three years.
- It will have a daily flow rate of 216,000 barrels with six pumping stations and two pressure reduction stations.