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 technical experts, national oil companies and politicians 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 Tanzania.
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 said 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 (HGAs), 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 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, maintained that he and his technical persons had to ensure that every aspect of the deal was properly negotiated.
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.
Uganda 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.
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 obligations of both Uganda and Tanzania in relation to realization of the East African Crude Oil Pipeline(ECAOP)
This weekend negotiation comes just after government asked Parliament to allow it to borrow over Shs 481 billion 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.
The Money 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 a 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. URN