October 24, 2017

Presidents reaffirm Uganda-Tanzania pipeline plan

May 22—Construction of the 1,400 kilometre pipeline from Uganda’s oil fields to the Tanzanian coast moved a bit closer after President Yoweri Museveni and President John Magufuli signed the East African Crude Oil Pipe Line Agreement (EACOP) in Dar es Salaam recently.

The proposed pipeline will run from Hoima in western Uganda to Tanga port. According to a communiqué issued on the sidelines of the 18th Heads of Summit meeting, the two agreed that the project offered both economic and social benefits to the two countries. Total, the French energy multinational, has already promised to provide the bulk of the funding for the $3.8 billion to $4 billion project.

Uganda has an estimated two billion barrels of recoverable oil available, but currently lacks the infrastructure to get the crude to market. In the next 10 years, a projected $8 billion to $10 billion in new investments will be needed to develop Uganda’s oil industry.

The Presidents agreed that value added tax should be deemed payable during the three years of the construction phase, but depreciation should be based on a 5% straight line method throughout the lifetime of an asset and that the application of branch profit tax should be reviewed by the two states as and when the pipeline structure is complete.

Magufuli and Museveni told their respective Attorney Generals to finalize cleaning up the draft Intergovernmental Agreement incorporating the above agreed positions which will be signed by the energy ministers between the two countries on Friday May 26, 2017 at a ceremony to be held in Uganda.

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