UNOC BOSS NABBANJA TELLS HOW RECENT PIPELINE AGREEMENT WILL CHANGE UGANDA’S OIL INDUSTRY
By Mulengera Reporter
Proscovia Nabbanja, the Executive Director of the Uganda National Oil Company (UNOC), has explained what two recent oil pipeline agreements signed on Friday and Sunday mean for the future of Uganda’s oil industry.
On Friday, while at State House Entebbe, Uganda’s government officials and Total E&P representatives signed the Host Government Agreement (HGA), a document that clearly spells out the rights and obligations of Total and those of Uganda concerning the East Africa Crude Oil Pipeline (EACOP) project. President Yoweri Museveni himself and Patrick Pouyanne, the Chairman and Chief Executive Officer of Total, attended the signing ceremony and were major witnesses as the Minister of Energy and Mineral Development, Mary Goretti Kitutu, and Nicolas Terraz, the Total Exploration and Production President for Africa, put pen to paper in a move that could mean a lot for Uganda’s oil sector.
After the State House event at which Museveni admitted that the process had taken time, but thanked Ugandan oil experts for a job well done in negotiating a good deal for the country, Museveni flew to Tanzania to ink another agreement with President John Pombe Magufuli, an agreement that sorted out the modalities between the two nations, regarding the 1,445km pipeline that is expected to run from the Albertine Region to Tanga in Tanzania, and also swallow an enormous $3.5bn (almost Shs13tn).
Museveni travelled to Tanzania “glad that Total and other companies licensed in the country are taking bold steps to quickly commence the production of petroleum.” After the signing of the pact, Magufuli was upbeat on the prospects from the pipeline project, telling Tanzanians it would create thousands of jobs.
It has undoubtedly been an important weekend for Uganda’s oil industry enthusiasts, and for all those who have been asking when Uganda would begin production. When she appeared on NBS TV’s Breakfast Meeting hosted by Julius Bukyana this Monday morning, UNOC CEO Nabbanja reiterated the optimism that echoed through the State House hall in which the Host Government Agreement (HGA) was signed on Friday. Nabbanja, like Museveni and the Total E&P team, hopes the final investment decision into production activities will be reached by the end of this year 2020. Nabbanja says both the HGA and the inter-governmental pact (between Tanzania and Uganda) are an expression of commitment into expediting the pipeline project and the oil production process. She described the spirit of the two agreements as a commitment that the pipeline can be achieved in a timely manner.
Noting that the negotiations had dragged on for two years, Nabbanja said the agreements were “an important achievement” in clearly stipulating the legal, governance and commercial terms of joint partnerships, as well as bringing on board UNOC, the commercial arm of the country’s oil sector, which was formed after the negotiations had started. Other issues that clearly come out from the HGA include voting rights of the partners, including UNOC.
According to the UNOC boss, the two agreements have now cleared the way for negotiations on crude, tariff and shareholders agreements, all of which she expects will be easier to reach after the hard nut to crack that was the HGA.
In negotiating all these pacts, Nabbanja went on, oil experts will ensure that Uganda gets the best in terms of tariff regimes and transportation deals. On whether the agreements will not leave out Ugandans, Nabbanja reminded nationals of plans for the inclusion of local companies in areas of service provision for the oil sector, including ICT, catering, warehousing, procurement and construction. She also made it clear there was an elaborate plan to sub-contract Ugandans, and efforts to equip local firms on bidding, certification and documentation were already ongoing under the incubator program for SMEs.
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