Tanzania: How Crude Oil Pipeline Project Is Beneficial

THE signing of the long-awaited Final Investment Decision (FID) for the construction of the East African Crude Oil Pipeline (EACOP) is set to unleash massive social economic benefits for both Uganda and Tanzania.

The 3.5 billion US dollars project will have short and long-term economic benefits for the two neighbouring countries, specifically during the construction phase.

According to some official reports, the huge investment of the 1,444-kilometer EACOP construction will be the major source to increase direct foreign investment in both countries by 60 per cent.

Tanzania is expected to earn an estimated 3.24bn US dollars once the project becomes operational with more than 18,000 jobs set to be generated over the next 25 years.

The pipeline is intended to transport crude oil from Uganda's oil fields to the Port of Tanga, Tanzania on the Indian Ocean.

The oil pipeline would start in Buseruka sub-county, Hoima District, in Uganda's Western Region.

It would travel in a general south-easterly direction to pass through Masaka in Uganda, Bukoba in Tanzania, and loop around the southern shores of Lake Victoria, continue through Shinyanga and Singida town, and end at the Port of Tanga, Tanzania, for export from the Indian Ocean.

Eighty per cent of the pipeline would run through Tanzania and upon completion, the pipeline is expected to have capacity of 216,000 barrels per day and the project will strongly improve the GDP for both countries through taxes.

As part of long-term economic benefits, the EACOP project is expected to attract more investors for exploring oil and gas resources in the countries.

The project is envisaged to increase Tanga Port's logistic activities; with the port also due to experience more 600 million US dollars direct investments in establishing new jetty, storage tanks, and supporting facilities.

The local communities along the EACOP route will benefit from various training and education programmes such as road safety, welder training.

Also, the small towns along the pipeline's path are likely to experience the local business boom as those working on the pipeline will stay in the construction camps, local hotels, drink in local bars. And spend money on entertainment.

There will be individual benefits from the job opportunities that will emerge throughout the project, with approximately 10,000 jobs expected during the construction phase. This includes skilled workers, semi-skilled workers, and casual workers.

During the construction phase of the proposed EACOP project, indigenous casual workers will be employed from each district the pipeline passes and this will improve the development of local capacity through technology transfer.

Also, the EACOP will create short-term employment of about 2-3 years, for welders, heavy equipment operators, truck drivers, mechanics, site engineers, construction managers, construction labourers and more.

Uganda previously agreed to build a joint Uganda-Kenya Crude Oil Pipeline (UKCOP) to the Lamu Port in Kenya.

Concerns regarding security and cost, however, reportedly motivated parallel negotiations with Tanzania regarding a shorter and safer route to Tanga Port, with the support of the French petroleum conglomerate Total SA.

At the 13th Northern Corridor Heads of State Summit in Kampala in April 2016, Uganda officially announced its choice for the Tanzania route for its crude oil, in preference to the Mombasa or Lamu routes in Kenya.

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