Uganda and Tanzania push for the construction of $3.5Bn crude oil project

Uganda and Tanzania are presently moving in on their plans on the construction of the $3.5 billion East Africa crude oil project. Ministers of Energy from the two countries met for talks over the project in Kampala.

This is in accordance to the agreement signed between the two governments last year.

According to media reports, there was concern raised between the two parties at the meeting. This is after noting that they seemed to be moving behind schedule as far as the remaining legal requirements to move the oil project to the next stage are concerned.

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One such requirement is the pending signature of the host government agreement. This is said to have been pending since 2017, despite the laying of the foundation stones for the project. Consequently, the parties agreed to have the host government agreement between the two governments signed before the end of next month.

Meanwhile, it remains unclear whether the Uganda Petroleum Authority has studied the front end engineering designs. This is with a view to pave way for the detailed engineering designs. Furthermore, the two governments have from the onset required the joint venture partners transport the crude oil at no less than $12.2 per barrel from Hoima to its final destination.

The pipeline is set to reach completion in 2 years’ time. The country will also start oil production in the same year.  According to media reports, the funding for the project will be sourced from debt collection and equity from joint venture partners as well as national oil companies of Uganda and Tanzania.

Total E&P Uganda, Tanzania and Uganda last year appointed three companies as financial advisors for the pipeline. These included consortium of Standard Bank, Imperial Bank of China (IBC) and Sumitomo Mitsui Banking Corporation Europe Ltd.