Local entrepreneurs remain cautious
Kampala, Uganda | RONALD MUSOKE | Following the signing of the host government agreement with Uganda on the weekend of Sept.11, senior officials from the French oil major, Total, say they are now ready to move faster project activities that will ensure Uganda produces first oil in three years’ time.
Pierre Jessua, the managing director of Total E&P Uganda said in a statement published on Sept. 11 that the company intends to “resume land acquisition activities in Uganda while respecting the highest human rights standards.”
Arnaud Breuillac, Total S.A’s exploration and production president also told senior Tanzanian officials, as per Tanzanian media reports, that even with the current global context where many firms are cutting back on (investment) activities, that will not happen with the East African Crude Oil Pipeline (EACOP) project.
“At Total, the EACOP project in Uganda and Tanzania is considered as a landmark to anticipate the rebound of the economy,” he said.
But local entrepreneurs who have positioned themselves since 2012 for opportunities in the oil industry remain cautious.
Emmanuel Mugarula, the CEO of the Association of Uganda Oil and Gas Service Providers told The Independent that as much as the signing of the agreement was hyped as a milestone, they are cautiously optimistic since they have been disappointed before by such public pronouncements.
“We have had so many false starts,” Mugarula told The Independent, “The excitement has worn off.”
But Robert Kasande, the Permanent Secretary in the Ministry of Energy and Mineral Development told The Independent on Sept.17 that the signing of the agreement brought back the momentum that was lost in 2019.
“The signing of the agreement is extremely important for Uganda because it means we are getting closer to the final investment decision by the oil companies,” he said.
On Sept. 11, President Yoweri Museveni and Patrick Pouyanné, the chairman and CEO of Total watched on as Mary-Goretti Kitutu, Uganda’s Minister of Energy and Mineral Development and Nicolas Terraz, the Total Exploration and Production President for Africa signed the Host Government Agreement (HGA) for the EACOP.
Two days later, on Sept. 13, President Museveni flew to northern Tanzania and met President John Pombe Magufuli, in his hometown of Chato to sign a similar agreement with Tanzania. The agreements have now cleared the way for the construction of the 1,445km long pipeline that will transport crude oil from Uganda’s oil fields in Hoima, to the Tanzanian port of Tanga.
The governments of Uganda and Tanzania first signed the intergovernmental agreement for the EACOP project in May 2017— a ceremony which was hailed as a significant milestone for the pipeline project.
The agreement marked the decision of the two neighbouring states to embark on developing the longest electrically heated crude oil export pipeline in the world. The milestone is a major step towards the development of Tilenga (the northern Lake Albert upstream project) and Kingfisher project since the crude export pipeline is one of the key routes for marketing of Uganda’s oil resources as agreed in the memorandum of understanding for the commercialization of the Lake Albert oil and gas resources signed in 2014 between Uganda and the upstream joint venture partners.
In principle, the two governments agreed to expedite the harmonization of pending issues in the “spirit of the East African Community.” The two presidents said the remaining agreements are to be fast-tracked to speed up the implementation of the EACOP project.
The Host Government Agreement outlines issues pertaining to tax and other revenues to be accrued from the project; participation of Tanzanians in the project and how to deal with challenges that might arise during implementation of the project.
Other pending agreements include; the Shareholders Agreement (SHA), Ports Agreement (PA) and Land Lease Agreement (LLA). When all these agreements are signed, it is expected that Total will take the final investment decision (FID) — a decision which will usher the French oil giants into the construction phase of the project.