Uganda’s President Yoweri Museveni and his Tanzanian host, President John Magufuli, announced on 21 May that the Inter-Governmental Agreement (IGA) for the East Africa Crude Oil Pipeline (EACOP) — a 1,143 km pipeline costing US$3.5 billion, which aims to transport oil from fields near Hoima in western Uganda to Tanzania’s Indian Ocean seaport of Tanga — would be finalised and signed by 26 May in Kampala. They were speaking the day after the East African Community (EAC) Heads of State Summit was held in Dar es Salaam. Remarkably, President Museveni was the only head of state to make the trip to Dar es Salaam.

The joint communiqué is quite specific in identifying the issues that were delaying the project. It specifies that VAT will be deemed to be paid during the three year construction phase.

Considerations over taxation during operations have been shelved; branch profit tax is to be considered once the corporate structure has been finalised. Depreciation has been agreed to be set at 5%. Finally — and not mentioned in the communiqué — the terms of the IGA will continue if there are further oil discoveries in either Uganda or Tanzania.

Speaking at the communiqué signing ceremony, President Magufuli was upbeat about the prospects of further discoveries. ‘If there is gas, there must be oil!’ he declared, saying it would be found in Lake Tanganyika and Lake Eyasi. He was enthusiastic about the refinery, saying that the region would benefit from cheaper local oil. On his part, Museveni also talked up the refinery, saying it would be the basis of reinvigorating East African airlines to allow them to compete with Middle Eastern airlines.  … [article continues] …

This is an excerpt from an article in our fortnightly East Africa Politics & Security publication.