A fee of $12.2 will be levied on each barrel of oil from Uganda going through the proposed Hoima-Tanga crude oil pipeline.
According to the technical report which formed basis for Uganda’s decision to settle with the southern route, the tariff is considered least compared to $17 (or higher) estimated for the route from Hoima through Lokichar to Lamu in Kenya.
Speaking before the decision, Uganda energy Minister Irene Muloni said main interest was “a least cost route considering tariffs, terrain, infrastructure and viability of the port of transportation.”
Officials from both Uganda and Kenya held a series of close door meetings comparing notes on a fact finding assignment on the economic viability of all Oil Pipeline routes including; the Tanga in Tanzania, backed by a Gulf Interstate Engineering study and French giant Total and the southern and northern Kenya routes, supported by the Toyota Tsusho feasibility study backed by Tullow Oil Plc.
The tariff charged on each of the route was among the key considerations between both parties as the haggled the way to the decision.
The team was created following a meeting between Uganda President Yoweri Museveni and Kenya’s Leader Uhuru Kenyatta, respective oil ministry officials and industrial players held in Nairobi. The talks were held to resolve the deadlock that had shrouded the Project.
The project cost for the 1,403-kilometre Hoima-Tanga pipeline, in the report, was tagged to a cost o $3.55b. On the other hand, the Lamu pipeline was to cost $4.2b.
According to the Daily Monitor newspaper, Uganda authorities are expected to travel to Tanzania for discussions on how to map out a work plan for the construction of the pipeline. Oil companies France’s Total E&P, UK’s Tulow Oil Plc and China’s Cnooc, who will fund the project, were also invited.