Written by
Faridah N Kulumba
Africa-Press – Tanzania. Uganda and Tanzania’s private sector partnership on 20, September, 2021, agreed on four issues that need addressing, if local businesses in the two nations are to benefit from the $3.5 billion East African Crude Oil Pipeline (EACOP) from Hoima in Uganda to the city of Tanga.
The founder and chairman of Association of Tanzania Oil and Gas Services (ATAGOS) Mr Abdulsamad Abdulrahim, revealed that the Uganda government had already addressed work and border permits issues as well as bureaucracy problems, as The Citizens reported.
First agreement
On 11 April 2021, the president of Uganda Yoweri Kaguta Museveni, and the new Tanzania’s president Samia Suluhu Hassan signed the long awaited agreement for building an oil pipeline which will ship crude from fields in western Uganda to the international market.
The two countries together with the French oil giant Total and CNOOC signed the deal in Uganda worth $3.5 billion for construction of the pipeline which would be the world longest at 897 miles.
This followed Tanzania’s president Samia making her first state visit to the Pearl of African nation for signing the oil agreement that had been long held up by tax disputes, administrative delays and also due to the sudden death of President Dr John Pombe Magufuli who died due to heart condition on the 17 March 2021 only five days away from signing of the agreement.
Recent agreement
The two countries held a meeting in which they agreed on the need for the Tanzanian government to address the bottlenecks ranging from border and work permits, red tape, to creation of a special Fund meant to help local entrepreneurs.
They also agreed that the government might do something to enhance financial institutions so that they could offer quick access to finance with no collateral and interest rate.
The government of Tanzania will also walk a talk on addressing the challenges as agreed on the Host Government Agreement (HGA)
Tanzania and Total Oil company last year in late October signed a HGA that will pave the way for the construction of a crude oil pipeline.
Access to finance
To promote local content, financial institutions had to remove bottlenecks when it comes to quick access to finance. The bottlenecks were trying to stop the local private sector from taking part in the 1,447 kilometer pipeline project.
This is so because some countries that will be competing with in the bids are aready to issue quick access to finance with nil collateral and interest rate
Business bidding
Businesses from the two countries had agreed to form joint ventures to bid for tenders that will be announced.
According to Mr Abdulrahim, the two nations had each received a grant of $500,000 from African Development bank (AfDB) meant to support Small and Medium Enterprises (SMEs) in terms of capacity building.
Also in a fresh bid to promote local content during the implementation of the project, ATOGS had inked a pact with Stanbic Bank named Stanbic Business Incubation meant to support local content, youth and women in the energy sector.
The oil pipeline project is reportedly set to create employment for more than 10,000 Tanzaniana during the construction period, and 1,500 after oil transportation starts along the facility.
The stage has already been set for the construction of the pipeline to commerce following the signing of all HGAs.
