A Ugandan source in attendance told URN that the negotiations could go on until Sunday afternoon as the two sides held cards on their chests vouching for how best their countries could benefit from the pipeline project. The pipeline will evacuate Uganda’s oil from the Albertine to the external market.
Ugandan and Tanzanian delegations were
yet to agree on some of the crucial aspects of the East African Crude Oil Pipeline
by late Saturday.
The two delegations comprised of politicians, technical
experts and national oil companies have since Friday been engaged in negotiations in a race to conclude a number
of agreements for the planned signing of the agreements to be witnessed by
President Museveni and his guest, Samia Suluhu Hassan of the President of the United Republic of
The Tanzanian delegation is led by Professor Palamagamba John Aidan Mwaluko Kabudi. Professor Palamgamba, was recently
appointed Minister for Constitution and Legal Affairs by President Samia
Suluhu Hassan as she took over from Late John Pombe Joseph Magufuli .
Palamgamba has been involved in the Uganda- Tanzania crude oil pipeline negotiations right from when he was Foreign Minister and Minister of East Africa Affairs of Tanzania under John Pombe Joseph Magufuli.
The Ugandan side is led by Energy Minister, Dr. Gorreti Kitutu. In attendance
are officials from the Petroleum Authority, the National Oil Company of Uganda,
the Attorney General’s Chambers as well as the Foreign Affairs Ministry.
A Ugandan source in attendance told URN that the negotiations could go on until Sunday afternoon as the two sides held cards on their chests vouching for how best their countries could benefit from the pipeline project that will evacuate Uganda’s oil from the Albertine to the external market.
While it has been widely reported that the two governments signed the Host
Government Agreements (HGA), sources say the agreements were initialed in
mid-September 2020 pending final signature on endorsement by the states
and the oil companies.
The death of President John Pombe Joseph Magufuli affected the roadmap towards the conclusion of the deals that should pave way for the construction of the pipeline. Magufuli had been an advocate of the fast-tracking of the project.
President Museveni in September last year speaking after the Ugandan side and oil company had agreed on aspects of the host government agreement has been endorsed , maintained that he and his technical persons had to ensure that every aspect of the deal was properly negotiated.
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The Host Government Agreements (HGA) should provide for how the over $3.5
billion East African Crude Oil Pipeline (EACOP) is managed to ensure a stable
operation over an anticipated twenty-year period. Apart from the Host Government
Agreements (HGAs), the two sides are required to agree on the shareholder agreements.
This should be with the Tanzania
Petroleum Development Corporation ( ( TPDC), Uganda National Oil Company
(UNOC) and the International Oil Companies in the 1,443km East
African Crude Oil Pipeline running from Hoima in Uganda to the port of Tanga in Tanzania.
Total E&P or TEPU is the majority
shareholder in the project with 72 per cent while Uganda through Uganda
National Oil Company (UNOC) has 15%. Chinese oil company—CNOOC has an 8% shareholding.
Tanzania through its national oil company ( TPDC) have five per cent.
Petroleum Authority Executive Authority Executive Director, Dr Earnest Rubondo has in the past explained why Petroleum Development Corporation ( ( TPDC) has to team up with UNOC in this deal.
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The shareholder agreements aside,
the two states should agree on crude oil offtake and purchase, crude oil
transportation, lifting, production metering and allocation.
Production metering and allocation
will be crucial when oil comes out of the ground because it will guide the operators
of the actual production rates.
Denis Yekoyasi Kakembo, the energy
and tax expert at Cristal Advocates told URN that the conclusion pending agreements
in crucial because it would unlock the current lull in the oil and gas sector.
Kakembo was optimistic that the two
sides are likely to hummer a deal during the two days given that they had
already signed the Inter Government Agreements (IGA) and had initialed the Host
Government Agreements (HGA).
The agreements provide for
obligate Uganda and Tanzania in relation to realization of the
East African Crude Oil Pipeline(ECAOP)
This weekend negotiation come just after
government had asked Parliament to allow it to borrow over 481 billion
shillings ($130) for Uganda National Oil Company’s shareholding equity in the pipeline.
Finance State Minister, David Bahati
recently told Parliament that money was needed for Uganda to solidify ownership
of the project by paying off what is known as historical costs related to the
Crude Oil Pipeline.
The said “Historical Costs” are supposed
to be refunded to the International Oil Companies for costs incurred in social and
environment impact assessments as well as the project’s design.
according to sources at Uganda National Oil Company must be reimbursed to Total
E&P Uganda B.V. (Total ) or French Oil Giant Total as soon as Uganda and
Tanzania sign the shareholder agreements.
It has been widely anticipated that
out of the negotiations in Kampala, Total’s Chairman and Chief Executive Officer,
Patrick Pouyanné, who is already in Kampala might surprise the two delegation
with the Final Investment Decision (FID).
But another source at the heart of
the negotiations agrees that if the pending agreements are signed, then they would
give the limelight to the Oil Company to announce at FID.
The source however indicates that
the oil companies wait until Parliament has passed the EACOP Bill which is yet
to be tabled to Parliament by cabinet for consideration.