12 September 2017

Tanzania: MPs Ratify Pipeline Deal

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(file photo)

Dodoma — Members of Parliament (MPs) yesterday ratified the Intergovernmental Agreement (IGA) for execution of the mega Hoima-Tanga oil pipeline project.

The ratification sets a new stage towards the implementation of the 1,445 kilometre East African Crude Oil Pipeline Project (EACOP).

The legislators defied their political divide and joined hands to welcome the project on which they expressed optimism, saying will bring immense economic and social benefits to people of the two countries.

MPs on whose constituencies the proposed pipeline will pass, asked the government to ensure proper compensation for land. Tanzania and Ugandan governments signed the agreement on May 26, last year, but Article 2(b) of the pact, requires, among others, the parliaments in the two countries to approve the project before implementation.

Information, Culture, Arts and Sports Minister, Dr Harrison Mwakyembe, tabled the treaty in the august House yesterday on behalf of the Minister for Constitution and Legal Affairs, Prof Palamagamba Kabudi.

Mwakyembe explained that each country will enter into Host Government Agreement (HGA), with companies undertaking the multi-billion dollar pipeline from Hoima in Uganda to Tanga.

"...the contract provides for the governments of Tanzania and Uganda to work closely with companies executing the project on national content for procurement of human resources, goods and services from the respective countries," he explained.

According to the minister, companies implementing the project are also required to ensure transfer of technology to locals. Dr Mwakyembe explained that in case of unavailability of certain service or product in the two countries, the contractor could engage foreign suppliers subject to involvement of local companies.

The Deputy Chairperson of Parliamentary Committee on Energy and Minerals, Mr Deogratius Ngalawa (Ludewa-CCM), raised concerns over a clause concerning foreign exchange in the contract, saying it could violate Tanzania's Natural Wealth and Resources (Permanent Sovereignty) of 2017.

"There is also need to be watchful on the clause covering corporate income tax that allows the contractor to forward exemptions to the next fiscal year, losses to be incurred before, during and after implementation of the project," Mr Ngalawa said when presenting the views of the committee.

Special Seats MP on Chadema Devotha Minja appreciated the government efforts to secure the oil pipeline deal, notwithstanding the stiff competition from other countries in the region.

"It is obvious that winning the project involved wider diplomacy and incentives which encouraged the Ugandan government to opt for Tanga route," Ms Minja said when presenting the views of the opposition.

In his contribution, Tanga Urban MP on CUF ticket Musa Mbarouk urged the government to ensure residents are adequately compensated for their land at the market value and provided with alternative land for agriculture. Chemba MP Juma Nkamia (CCM) and Muleba North MP (CCM), Prof Anne Tibaijuka, called for public awareness on the proposed project and mobilisation of people for its security.

Uganda has discovered 6.5 billion barrels of crude oil in the Albertine and it plans to refine some of it for markets in the region, with the big chunk of it transported through the pipeline to export markets.

Once the pipeline starts operations, Uganda will be exporting 216,000 barrels of the valuable liquid per day, with one barrel costing 12.2 US dollars in transportation costs.

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