Insurers from Tanzania and Uganda have agreed to form a consortium that will ensure that five per cent of premiums are retained locally under local content in the East Africa Crude Oil Pipeline (EACOP).
This comes as actual construction of the EACOP is slated to begin in July, this year and first oil output is anticipated in 2025.
Uganda Association of Insurers (UAI) and Association of Tanzania Insurers (ATI) said that globally, oil firms would prefer to do everything offshore as many have their own insurance companies.
“The consortium will enable us to speak the same language. We insure oil and gas for the first time so we didn’t have enough necessary skills. The percentage agreed is five per cent of retention and we will work closely together on this,” said the chairman UAI, Mr Latimer Mukasa.
Mr Mukasa was speaking in Dar es Salaam at the weekend when the two associations met for the purpose of discussing ways of working together.
“We had a very good day. We met with Tanzania Insurance Regulatory (Tira), National Insurance Corporation (NIC) and Tanre because those are key players in this project,” he said.
Upon completion in 2025, EACOP will be transporting 216,000 barrels of oil per day in Hoima district in Uganda’s Lake Albert (Mwitanzige) region to the Tanzania Indian ocean port of Tanga, spanning a distance of 1,443km.
The pipeline will run for 296 km in Uganda from Kabaale village in Hoima district to the Uganda-Tanzania border traversing 10 districts covering 171 villages and 2,321 acres of land.
TotalEnergies E&P and China National Offshore Oil Corporation (CNOOC) took the Final Investment Decision (FID) in February to invest $10b toward production and transportation infrastructure to drill, produce and commercialise Uganda’s oil.
The ATI chairman, Mr Suleiman Khamis, said that local insurers lack the required capital to insure large projects, saying their consortium would help in getting some amount of premiums and commission.
“We have taken this project as part of leering and gaining experience but also to make auditing to ensure a certain amount remains in the country so that it can help to boost the insurance sector. The consortium will help both of us to speak the same language. That means after we conclude, no one will allow us to come up with different ideas,” he said.
Mr Khamis said that the pending task between the two parties was to agree on how the issue of premium would be paid.