Uganda and Tanzania have postponed a high-profile meeting on the East African Crude Oil Pipeline, initially scheduled for Monday, following the death of Tanzanian President John Magufuli.
Suhulu Hassan, who was sworn in as Tanzania’s president on Friday and previously vice president under Mr Magufuli, was slated to lead a Tanzanian delegation to a meeting with President Yoweri and Patrick Pouyanné, the chairman and chief executive officer of Total S.A., the French oil major, at State House, Entebbe.
The meeting was pushed to a later date after the death of Mr Magufuli, which was announced last Wednesday by Ms Hassan, according to sources. Ms Hassan also announced that Tanzania will observe 14 days of mourning for Mr Magufuli; the meeting will most likely be held after that period.
Mr Mafuguli, who was 61, died from heart complications, said Ms Hassan while announcing his death. However, there is wide speculation that the true cause of his death was the coronavirus; Mr Magufuli was a Covid-19 denier who refused to implement containment measures taken by other governments across the world in Tanzania.
Officials from Uganda, Tanzania, and Total S.A., the parent company of Total E&P, the lead developer of the pipeline project, were expected to sign agreements on the pipelines’ shareholding, tariffs, and transportation.
The shareholders’ agreement lays out the roles, rights and protections of the pipeline’s shareholders, while the tariff agreement details the duties on the transportation of crude oil from Hoima, in western Uganda, to Tanga on the Tanzanian coast. The transportation agreement deals with the shipment of oil from Tanga to international markets.
Total E&P owns 72 per cent of the 1,443-kilometre pipeline, Uganda has a 15 per cent shareholding, the China National Offshore Oil Corporation owns 8 per cent, while Tanzania’s stake is 5 per cent. Uganda’s interest in the pipeline is managed by the Uganda National Oil Company while the Tanzania Petroleum Development Corporation oversees Tanzania’s interest.
The signing of the three agreements is expected to pave way for Total and Cnooc to make a final investment decision to go ahead with Uganda’s oil and gas projects. The projects include the Tilenga oil fields whose development is estimated at $6bn, the Kingfisher oil fields, and the oil pipeline; Kingfisher requires $2bn in new investment while the pipelines’ execution is expected to cost $3.8bn.
Uganda’s initial financial commitment to the pipeline is $130m (Shs475.6bn). However, parliament last week asked officials from the finance ministry and the national oil company why they are asking for the figure today yet they have been aware of the commitment for some time.
The officials said $70m is for the government’s equity stake in the pipeline while the rest, $60m, is to offset Total’s pre-construction spending in accordance with the shareholding agreements.
Total E&P has so far spent close to $400m in pre-construction activities, including feasibility studies, project design and route mapping since 2016, according to officials. The government is expected repay the money.
