Uganda agrees to pay oil firms more to use planned pipeline

In Summary

• At a length of 1,445 kilometres, the project will cost $3.5 billion (Sh350 billion).

• It has been described as the world’s longest electrically-heated pipeline.

Ugandan President Yoweri Museveni.
Ugandan President Yoweri Museveni.
Image: FILE

Uganda said on Wednesday it had agreed to pay a higher tariff to use a pipeline planned to run through neighbouring Tanzania, boosting the prospects of a project vital for Uganda’s nascent petroleum industry.

Landlocked Uganda in 2016 picked a route for a pipeline through neighbouring Tanzania to the Indian Ocean port of Tanga to help export its crude.

At a length of 1,445 kilometres, the project will cost $3.5 billion and has been described as the world’s longest electrically-heated pipeline.

Initially, Uganda said it had agreed with investors and Tanzania that it would pay a tariff of $12.2 for each barrel of crude shipped through the pipeline.

But the investors, which include France’s Total, later demanded a higher tariff, according to Ugandan officials, stalling negotiations over the project.

The government has agreed to increase the tariff to $12.77 per barrel after further talks with the investors, Energy Minister Irene Muloni said in a statement.