PRESIDENT John Magufuli yesterday nodded to a request by his Ugandan counterpart, Yoweri Museveni, to transport gas to Uganda for iron smelting.
President Museveni had appealed to Dr Magufuli to consider constructing a gas pipeline from Tanzania to Uganda along the same route of the crude oil pipeline from Hoima to Tanga, whose construction was launched yesterday.
Mr Museveni said Uganda has discovered a huge chunk of iron ore reserve, but could not mine the resource due to lack of coal or gas for smelting. Speaking at Chongoleani Village here during the ceremony to lay the foundation stone for the mega 1,445km crude-oil pipeline, Dr Magufuli assured his guest that Tanzania will use the same route to supply gas to Uganda.
"Uganda needs natural gas to revive her industries and thus we will use the same route to have another pipeline to sell the energy to Uganda," President Magufuli said during the colourful ceremony.
On the other hand, President Museveni hailed the government of Tanzania for scrapping taxes on all imported materials to be used in undertaking the 3.5 million US dollars (about 8trl/-) project, the largest private-funded initiative in the region.
Dr Magufuli disclosed that Tanzania had offered the initiative as a way of encouraging the Ugandan government to use the Tanga Port in a deal which a barrel will be charged 12.5 US dollars (about 27,500/-).
"We had to sacrifice a few things to encourage Uganda to transport its crude oil through Tanzania since it had other alternatives," the jovial Magufuli stated during the pomp-filled ceremony to lay the foundation stone.
Tanzania currently operates 532-km and 232-km pipelines which transport natural gas from Mnazi Bay in Mtwara and Songo Songo Islands in Lindi to the country's commercial capital of Dar es Salaam, where the energy is used for power generation, running of industries and cooking in few piloted areas.
So far, Tanzania boasts of roughly 53 trillion cubic feet of discovered natural gas offshore and onshore the Indian Ocean in Lindi, Mtwara and Coast Region, with just a small fraction being used for power generation, running of industries and cooking.
Not only that, Tanzania and Zambia run a pipeline transporting imported crude oil from the Dar es Salaam Port to Zambia which was constructed during the reign of founding Father of Tanzania, the late Mwalimu Julius Nyerere.
Dr Magufuli revealed further that the Ugandan government has agreed to release its experts to study hydrocarbons materials in Lake Tanganyika and Eyasi, stating that should Tanzania strike oil it will transport the energy through the pipeline launched yesterday.
The tax exemption is meant to reduce construction costs of the pipeline which is expected to transport 216,000 barrels of the precious liquid from oil fields in Hoima to Tanga Port for export.
Through the arrangement, all materials for the mega project will not be subjected to transit fee, value added tax and corporate tax, with an additional of 20 years of tax holiday. President Museveni said the discovery of hydrocarbons in Uganda would play a critical role in boosting economies of countries in the East African region.
The Ugandan leader urged member countries of the East African Community (EAC) to procure goods and services within the region to spur industrialisation and creation of employment opportunities.