President Yoweri Museveni and his Tanzanian counterpart, John Pombe Magufuli of Tanzania, have Saturday laid a foundation stone to mark the start of the construction of the Hoima – Tanga crude oil pipeline at a function held at Chongoleani in Tanga, Tanzania.
Both Presidents promised economic benefits to their nationals from this project and the oil resource generally but also emphasised that this undertaking makes stronger the bond of the two countries and the spirit of EAC.
At 1,445kms, it will be longest electrically heated oil pipeline in the world. Uganda will host 296kms of the pipeline, going through 8 districts and 24 sub-counties.
The remaining 1,149kms will be in Tanzania, covering right regions and 24 districts. It will be a mainly buried pipeline, with 1.2 metres of it beneath the ground.
Its estimated cost is $3.55 billion and construction should last three years at most. It will have a 216,000 barrels per day flow rate with six pumping stations and two pressure reduction stations.
Museveni says Uganda in unstoppable
“I thank our Tanzanian brothers and all stakeholders for organizing the colourful function at Chongoleani in Tanga, Tanzania,” Museveni said while speaking at the event.
“This is a great event not just for the two countries but entire East Africa. This pipeline is not just for Uganda’s crude oil, it is an East African pipeline.”
Museveni said there are already hydrocarbon resources in Eastern Congo, Turkana and possibilities in Tanzania, Rwanda and Burundi which can be served by this pipeline.
He said Uganda has 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.”
Tanzania already discovered large quantities of natural gas. Uganda needs this gas to process ore into steel for the big infrastructure projects. Imported steel makes Uganda’s projects expensive. East Africa imports $1.3b worth of steel which must stop, the president revealed.
“We thank the Tanzanian government for making the several concessions that ensured this pipeline project happens.”
He said these include no corporate tax, no VAT, free corridor for pipeline, depreciation tax holiday for 20 years and possibility of acquiring shares in the pipeline.
“These enabled us arrive at the cost of $12.2 per barrel, which even at the current world prices of oil ($50 per barrel) would still translate into a profit for us.”
He said there will be other benefits from the project like supplies (cement, etc) and other activities that will compensate for and exceed the waived taxes.
East Africa has a spectrum of resources, however, it’s the human resource, the 170 million people, who are the greatest resource.
They are consumers, for example, East Africa today imports $33b worth of goods and services yet its exports are just $13.8b.
“This is wealth we donate to other countries (EU, US, Japan, India, Russia etc), giving them jobs, bigger tax base, improving their technology, utilities and enhancing their prosperity in general.”
He said the numbers also help East African countries negotiate credibly with bigger markets of EU, USA, China, India, Russia. The human resource is therefore resourceful in the forward thrust of regional economies.
“I am therefore convinced that East Africa and certainly Uganda is unstoppable now. We have everything. Nothing will stop us from growth, development and transformation.”