President Yoweri Museveni has lauded the Tanzanian government for its cooperation towards the development of oil production in Uganda’s Albertine region, saying it will play a critical role in the transformation of the entire East African region.
He stated that with the existing natural gas deposits, Uganda and its neighbouring countries have potential to develop their trade and infrastructure.
Museveni who has been in Tanzania for the last couple of days was speaking during an event for the laying of the foundation stone to mark commencement of construction of the crude oil pipeline from Hoima to Tanga in Tanzania.
The event was held on Saturday at Chongoleani in Tanga, Tanzania.
The government of Uganda has set a target to produce its first commercial oil in 2020. Commencement of construction of the 3,000 kilometre long pipeline is, therefore, a significant development towards the target.
President Museveni remarked, “This is a great event, not just for the two countries but the entire East African region. This pipeline is not just for Uganda’s crude oil, it is an East African pipeline.”
“In Uganda’s case, we have 6.5 billion barrels of oil so far in 40% of the potential area. We shall have a refinery to produce petrol, diesel, aviation fuel, other petro-chemicals like plastics and associated gas for electricity and composite agriculture,” the President added.
With the ability to produce its own natural gas, he said, Uganda will be able to process ore into steel for the country’s big infrastructure projects.
He pointed out that East Africa imports steel worth USD 1.3 billion which makes the cost of infrastructure projects very expensive.
In 2016, Uganda chose the Tanzania oil pipeline route over Kenya due to fairer concessions that include; VAT and corporate tax exemptions, free corridor for the pipeline, depreciation tax holiday for 20 years and possibility to acquire shares in the pipeline. This was in addition to relatively better security compared to Kenya.
According to the agreement signed by the two states, Tanzania will charge the government of Uganda a cost of $12.2 per barrel.
Museveni said that even at the current world prices of oil of USD 50 per barrel, Uganda will still be able to profit from its oil.
“I thank Tanzania for this positive collaboration on the pipeline and ask that we do more collaborations. I look forward to H.E John Magufuli’s visit to Uganda where he will lay a foundation stone in Hoima,” Museveni said.
As a result of the strong cooperation of Tanzania’s President John Pombe Magufuli, Museveni said Uganda has finally got consent to build a power station on River Kagera which had stalled for many years.
“East Africa has a spectrum of resources. However, it’s the human resource, the 170 million people who are the greatest resource. They are the consumers. For example, East Africa today imports USD 33 billion worth of goods and services yet its exports are just USD 13.8 billion,” Museveni noted.
As a bloc, East African economies are better positioned to negotiate with bigger markets like E.U, USA, China, India and Russia, and drive their transformation, the President said.
He argued that the African continent must work towards political integration if it is to be more secure from neo-colonialism.