Total Decommissions Uganda-Tanzania Pipeline Deal

Last Friday the decision was taken by Total E&P to decommission the East African Crude Oil Pipeline (EACOP) project, ending activities and letting staff go. The company stated that an ‘uncertain business’ environment in Uganda was the reason behind their decision, citing the collapse of a deal for Tullow Oil Company to sell its stakes to Total and China National Offshore Oil Company.   

Total E&P, which rooted for the Tanzanian route as choice for the pipeline, established Total East Africa Midstream B.V as the interim developer for the crude oil export pipeline from Hoima in mid-western Uganda to Tanga Port at the Indian Ocean in Tanzania.

Chief among the reasons behind this deal collapse is the $185m tax bull that President Museveni is pushing on oil companies. This is on top of the Capital Gains Tax of $167m. A trend being seen across the East African Region, with governments taxing industry within an inch of its life, more often than not crippling the sector entirely, rather than providing a beneficial relationship between business and citizens.

Tanzania has repeatedly blamed Uganda for delays to the $3.6bn pipeline project, and today President Museveni and President Magufuli will meet to discuss latest developments and figure out a way forward for the project.

Uganda’s Energy ministry Permanent Secretary Robert Kasande neither denied nor confirmed the meeting. He said: “There is a meeting taking place this week between Uganda and Tanzania and all projects we are working on together [are] on the agenda.”