Tanzania’s Energy and Minerals Minister, Sospeter Muhongo, and his Ugandan counterpart, Irene Muloni, signed and exchanged documents to speed up the execution of the $3.5b East Africa crude oil pipeline (EACOP), World Pipelines reported. It was proposed that the parties considered removing the fiscal package from the intergovernmental agreement (IGA) to allow for an IGA to be signed or for the Tanzanian government to issue a letter of comfort to other parties.
The two countries agreed to grant multiple contractors the construction contract. This comes as Uganda sent a letter to the Ministry of Finance, Planning and Economic Development to start legal analysis of the proposed fiscal package, according to Ecofin Agency.
Construction of the 1403km EACOP pipeline, which will transport crude oil from Hoima (Uganda) to Tanga Port (Tanzania) is expected to be completed by June 2020. However, concerns have been raised by Tanzania due to the lack of clarity on the operational aspect of the EACOP at Tanga Port during execution of the project.
In April, Uganda announced that it would construct an oil pipeline through Tanzania instead of Kenya. Choosing a route is important for oil companies in order to make a final investment decisions on the development of reserves found in Uganda and Kenya, which are part of a series of hydrocarbon discoveries on Africa’s eastern coastline. Meanwhile, Tanzania has also discovered gas offshore.