The East African Crude Oil Pipeline Set To Boost Regional Economic Growth

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The East African Crude Oil Pipeline Set To Boost Regional Economic Growth

Wed, 02/13/2019 - 08:46
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Ugandan-Tanzanian Framework Agreement Signed for 1,445 km Pipeline Construction (Shutterstock / Andrea Danti)
Ugandan-Tanzanian Framework Agreement Signed for 1,445 km Pipeline Construction (Shutterstock / Andrea Danti)

Uganda and Tanzania are making great headway in the development of the East African Crude Oil Pipeline (also known by its acronym EACOP), a 1,445-km long underground crude oil pipeline from Hoima in Uganda to Tanga in Tanzania costing approximately $3.5 billion.

The technocrats from Uganda and Tanzania are scheduled to hold another round of discussions next week to iron out three contentious issues that were deferred during negotiations of the Host Government Agreements (HGAs) for EACOP.

The main sticking points are arbitration (and particularly the venue for such arbitration), revenue sharing and taxes, i.e., who gets what.

The EACOP will have three agreements — one between Uganda and Tanzania, the second one between Uganda and the joint venture oil companies, and the third between the joint venture oil companies and the Tanzanian government.

Joint venture oil partners are China National Offshore Oil Company, Total E&P and Tullow Oil Uganda.

EACOP is expected to lead to a 60 percent increase in foreign direct investment per year for the two countries during the construction phase, by attracting investors and companies to explore the potential in the region. Construction is scheduled for June, 2019.

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