Uganda and Tanzania have today Sunday signed the Host Government Agreement (HGA) for the construction of the East Africa Crude Oil Pipeline (EACOP) project.
The signing of the agreement took place at Chato in the northwest of Tanzania at a ceremony attended by Ugandan President, Yoweri Museveni and his Tanzanian counterpart, Mr John Pombe Magufuli.
The two leaders signed the intention to start implementing the $3.5b project, warning that anyone who may attempt to delay the process will be dealt with accordingly.
“This is an important step towards the implementation of the project. We, the presidents, have signed and I will see who will delay it,” Mr Magufuli said in his speech.
Mr Magufuli and Mr Museveni said in their joint communiqué that each country should conclude the host government agreement with the EACOP, start consultations for other agreements and expedite the implementation of the project.
Other remaining agreements which they said should immediately be worked on include that on port business, shareholding as well as financing.
Mr Museveni said he was ready to give Tanzania 80 percent of the profits due to the fact that the largest part of the pipeline was in the country but, according to him, Mr Magufuli settled on 60 percent.
“Uganda gave up about $800m that would have been generated in the course of 25 years just to make this project kick-off,” he said as he stressed the need for the project to start.
The two sides also signed a deal on the crosscutting issues.
The planned 1,445km (900 mile) East African Crude Oil Pipeline is needed by Uganda prior to starting commercial production.
The pipeline will run from Uganda’s oilfields in Buseruka Sub-county, Hoima District to the port of Tanga in Tanzania’s northeast.
According to Tanzania’s government spokesman, Mr Hassan Abassi, more than three-quarters (80 %) of the pipeline will run through Tanzania.
Though Uganda has not yet formally announced a date when the construction will begin, it had previously said that the project will take two-and-a-half to three years to complete.
Mr Abassi said that Tanzania will earn an estimated $3.24 billion and create more than 18,000 jobs over the next 25 years, or more, that the project will be in operation.
Mr Museveni already oversaw the signing of the HGA for the EACOP project between the government and French oil and gas multinational company Total.
The HGA is a legal agreement between a foreign investor and the local government relating to the development, construction and operation of a project by the investor.
Mr Museveni said that the conclusion of that deal with Total “moves us closer to production of crude oil in Uganda.”
London-based Tullow Oil expressed confidence that it will finalise the sale of its stake in Uganda’s oilfields to Total later this year.