President Dr John Magufuli has urged Tanzanians to grab jobs opportunities to be presented by the proposed $3.55 billion (around 8 trillion) crude oil pipeline project between Uganda and Tanzania following the signing of the framework agreement by the two countries.
The Intergovernmental Agreement (IGA) signed in the Ugandan capital Kampala on Friday last week covered terms on tax incentives for the project, implementation timelines, the size of the pipeline, and local content levels, keeping it on track for completion in 2020.
Signatories to the pact were Tanzania's Minister for Justice and Constitutional Affairs, Prof Palamagamba Kabudi, and Uganda's Minister for Energy and Mineral Development, Irene Muloni.
"I urge all Tanzanians to grab this opportunity in the construction and future operation of this project," Magufuli said via Twitter after the signing of the deal.
"This project bears testament to the continued cooperation of our two countries and the East African Community (EAC) in particular," he added.
The 1,445 km-long, 24-inch diameter pipeline will be heated so it can keep highly viscous crude oil liquid enough to flow.
It will begin in landlocked Uganda's western region, where crude reserves were discovered in 2006, and terminate at the Indian Ocean seaport of Tanga in Tanzania.
Total’s Uganda manager Adewale Fayemi said the project will become "the longest electrically-heated crude oil pipeline in the world".
"It's a record," he told Reuters, adding it will increase the flow of foreign direct investment and open a new phase of economic development in the region when completed.
Total is one of the owners of Ugandan oilfields, alongside China's CNOOC and Britain's Tullow Oil.
Total has said it is willing to fund the pipeline's construction but has not revealed what stake it will own in the project.Uganda estimates its overall crude reserves at 6.5 billion barrels, while recoverable reserves are seen at between 1.4 billion and 1.7 billion barrels.
Minister Muloni said construction of the pipeline will "facilitate and boost trade in the region" and create over 10,000 jobs.
The agreement stipulated that Uganda will pay an estimated transit tariff of $12.20 per barrel for pumping its oil through the pipeline, she explained.
In January, the two countries awarded the Front-End Engineering Design contract for the pipeline to the Houston, USA-based Gulf Interstate Engineering company.
Tanzania had offered a "fiscal incentives package" that led Uganda to choose it over Kenya as the favoured host for the pipeline, Muloni said. She did not describe the incentives.
Kenya had bid to host the same pipeline, which would have allowed it to earn transit fees and also transport its own crude in the Lokichar basin in the northwest.