Oil Pipeline Update: Tanzania Approves Fiscal framework, Project nears Final Investment

Tanzania approved a series fiscal packages in relation to the Crude oil pipeline partnership with Uganda including; exemptions on transit fee, import tax, withholding tax and value added tax.

Cabinet expects to table the approved proposals to the Tanzania National Assembly in January 2017 according to Daily News newspaper.

The revelations were made by Tanzanian Ministry of Energy officials during an inter-governmental meeting in the capital Dar es Salaam with Ugandan counterparts who have been in the country for a week.

Tanzanian officials informed the Ugandan delegation led by Ministry of East African Corporation Principle secretary Edith Mwanje that the Environmental Impact Assessment (EIA) of the $4 billion project has already been commissioned

Principal Geologist in Tanzania’s Ministry of Energy and Minerals, Engineer Adam Zuberi, also told Mwanje’s team  that a post government agreement between the partner states and executing companies will be effected before the final investment decision this November.

“Preparations are on a right pace … the pending agreements between the hosting countries and executing companies are critical for the timely completion of the project,” said Engineer Zuberi.

Without much detail on the negotiation deadline, Mwanje said the discussions on the project implementation were moving on quite well.

Last week, Bloomberg reported that oil production from Ugandan fields which are being developed by Tullow Oil Plc Total SA and CNOOC is unlikely to be exported per the nation’s exceptions due to infrastructure challenges.

“Everything being done in Uganda is for the first time ever, everything can be a risk,” said Will Hares, an analyst at Bloomberg Intelligence in London. “Timetables are prone to slipping, especially in frontier regions. All stakeholders would suffer from project delays.”

Developing the fields to commercial production requires about $8 billion, though engineering design work on the project has “yet to start,” said George Cazenove, a spokesman for Tullow. For production to begin in 2021, Tullow would have to make a final investment decision on the project by 2018, according to Cazenove. The crude would then need to be ferried along a yet-to-be constructed 1,400-kilometer (870-mile) pipeline to the Indian Ocean port of Tanga in neighboring Tanzania. The Ugandan government this week opened a tender for surveys of the route for the conduit.

Uganda expects the pipeline, which is backed by Total, to be completed in three years, according to Robert Kasande, the acting head of the state-run Petroleum Directorate. The government is considering building an airport in the oil region to speed up logistics, he said in an interview Nov. 10.


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