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The anticipated construction of the East African Crude Oil Pipeline (EACOP) has unlocked Uganda’s potential as a regional logistics hub, ultimately, linking it to a cheaper and shorter trade route to the sea and regionally.
EACOP is a 1, 443km export pipeline that will transport crude oil from Kabaale in western Uganda to the Chongoleani peninsula near the Tanga port in Tanzania. The proposed 24-inch diameter pipeline will export 216,000 barrels of crude oil per day at peak production.
EACOP has positioned Tanga port, previously unpreferred, to become Uganda’s port of choice. The pipeline is expected to open other opportunities besides crude oil exports because of state-of-the-art port facilities, a shorter distance to Kampala compared to the ports of Mombasa in Kenya and Dar Es Salaam in Tanzania, and the opportunity to expand other cross-border services.
“That port is not just for the EACOP, but will also be an entry point for imports, and exports. We hope that alongside EACOP, we shall also construct undersea cable which will then bring us faster internet and jobs for our young people,” said Mr. Stephen Asiimwe, CEO of Private Sector Foundation Uganda (PSFU).
Tanzania has been handling 15% of Uganda’s exports and imports, while the port of Mombasa accounts for the bigger 85%.
“We believe that in the long-term Tanga port is going to be mostly dedicated to Uganda’s imports and exports. There is a bilateral understanding between Uganda and Tanzania which shall support the project to service a bigger profile for our exports and imports,” Asiimwe added.
Already, Tanzania Ports Authority (TPA) has established an office in Kampala. It is envisaged that a container leaving the port of Dar Es Salaam will be at Portbell, in Kampala within 72 hours.
Socio-economic transformation
The heated pipeline construction will cost $ 3.55 billion- presenting a myriad of opportunities for local and international companies. EACOP is expected to lead to a 60 percent increase in foreign direct investment per year for Tanzania and Uganda during the construction phase.
EACOP shall include the construction of permanent structures in remote or unoccupied villages in Tanzania and Uganda. The structures include a pipeline corridor, access roads, pumping, and pressure reduction stations electric heating stations, and block valve stations.
It is expected that existing towns will grow while several smaller towns will sprout out along the pipeline route both on the Tanzanian and Uganda sides during the construction phase, instigating new economic activities and positive impacts on economic growth. For example, recently, the construction of a regional market at the Mutukula border was commissioned. The market is intended to enhance trade and improve the livelihood of citizens of Uganda, Tanzania, and other countries.
“EACOP is more than a pipeline, it is a trade corridor that has been created between Uganda and Tanzania which did not exist before,” said Mr. Patrick Mweheire, chairman, of the Uganda Chamber of Mines and Petroleum (UCMP). He is also the regional group chief executive of Standard Bank Group of Eastern Africa.
Livelihood restoration
While the project avoided as much as possible displacement of persons, a few have been directly impacted. The implementation of the Resettlement Action Planning is ongoing where construction of houses for Project Affected Household has been prioritized. Needless to say different Ugandan Companies like Atx Technology, Egiss Engineering, Excel Construction, Epislon have been contracted to construct the resettlement houses.
“Before the pipeline, I had a small land. I used to do crop farming. When EACOP passed through my land, they gave me money that I used to buy land for resettlement where they will build me a permanent house. I also bought another piece of land for food crops and I bought more land for animal grazing. My children are happy in school,” narrates Mr. Gard Byaruhanga, a peasant from Buhimba Sub-County, Kikuube district.
One can not miss the joy and excitement of most of the Project Affected Persons especially since the compensation and construction of the resettlement houses started.
“My current house is grass thatched. The one they are going to build for me will have 2 bedrooms and a living room. They will also build for me a kitchen and latrine which are going to be permanent structures,” An excited Byaruhanga added.
Improved bilateral relations
Even though East African Countries: Burundi, Democratic Republic of Congo (DRC), Kenya Rwanda, South Sudan, and Uganda have a common protocol to work together on all fronts, EACOP development has boosted the Uganda-Tanzania relations further.
In May, for example, Tanzania’s president Samia Suluhu Hassan paid a maiden state visit to Uganda since she took over the office in 2021. The two heads of state applauded the ongoing activities on EACOP.
Importantly also, the Heads of state signed a Memorandum of Understanding for the development of the 400KV Masaka-Mutukula-Kyaka-Nyakanazi-Mwanza transmission line. A second Memorandum of Understanding to corporate on security and defense for the projects was also signed.
With EACOP’s already visible socio-economic benefits to Tanzanian communities, President Suluhu opted to drop the outstanding non-tariff barriers imposed on Ugandan registered trucks plying Dar Es Salaam port, for bigger benefits that come with increased trade.
“The heads of state noted the growing total trade between Uganda and Tanzania and directed the responsible ministers to immediately remove any outstanding non-tariff barriers in order to fully harness the Uganda- Tanzania trade potential,” reads a joint communique.
In 2019, Tanzania imposed a ban on imports of Uganda sugar and instituted several non-tariff barriers that upset trade between the two states. The recent meeting has seen Tanzania reduce the tariff from $500 down to around $140 for cargo trucks destined to Uganda via the Mutukula border.
EACOP to foster the energy transition
EACOP was subjected to an Environment and Social Impact Assessment. Public hearings were held and a certificate of compliance was issued. The project is viewed as a gateway to Uganda’s energy transition as produced Liquified Petroleum Gas production (LPG) will provide an alternative to wood fuel that leads to deforestation. Importantly, companies have employed a mitigation hierarchy in their operations where sensitive areas have been completely avoided and mitigation and restoration of affected land will be done.
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