On Obsolescing Bargains: Hoima-Tanga Pipeline Edition

This is from the East African in March:

The incentive that among other things lured Uganda to choose the southern route is the tariff of $12.2 per barrel of oil that Uganda will pay to move its crude oil through Tanzania, which Ms Muloni says was “the best we got.”

pipeline

Source: Oil & Gas Journal

The East African has learnt that in a bid to hijack the deal from Kenya, which also discovered oil in the northern region, Tanzanian officials were willing to throw sweeteners into the deal, which included free land and a fair tariff.

But, after getting the deal, Tanzanian officials started raising doubts over the project’s benefits to Dar es Salaam, citing a number of issues, such as the fact that in Tanzania land belongs to the government, so Uganda did not have to compensate any landowners, hence an increase in the tariff to a figure that The East African could not establish, was seen as a fair deal for Dar.

I hope Ugandan negotiators are aware that Tanzania’s bargaining position will get even stronger after the 1445km pipeline is built.

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