Today, the Government of Tanzania have together with the Government of Uganda signed off to a Host Government Agreement (HGA), also together with Total, the supposed builder of the East Africa Crude Oil Pipeline (EACOP).
Today, all the years of waiting, stalling and finding measures of taxes pays-off. We can still wonder what is basic fee structure and what is the price of taxation of the extraction of oil exploitation in the Lake Albertine basin. In the same regard, we can wonder is the specific route for the pipeline and what consequences it will have to nature, reserves and national parks. Because, the drill itself is just in the near proximity of Murchinson Fall National Park. Before it will continue or pass through other untouched areas of both Uganda and Tanzania.
There is still not answers or openness about the deals in the regards to the Uganda National Oil Company (UNOC) and the Tanzania National Oil Company (TNOC), in combination to the ownership and licences of China National Offshore Oil Company (CNOOC) and Total. Therefore, there are plenty of stakeholders and everyone wants to profit on the resources.
With both Republics signing of the HGA agreement and preparing for the Final Investment Decision (FID). The building of the pipeline and the industry can start off. This has also been stopped by taxation and the questionable acquisitions of exploitation licences in Lake Albert. Therefore, the whole Heritage and Tullow taxation case and the costs it had for Total to pay off that. Is still not shown to the public or if the Government of Uganda has forgiven the past company to give way. While Tullow surely wanted profits for their time and the valuable licences they had gotten rights too in earlier rounds.
What is also worrying to me? Well, the deals are not public. The agreements between the Corporations and the Republics are practically unknown and only mere fragments is out. Just like the power-sharing of 60% to Tanzania and 40% to Uganda. Is still not saying much, considering this will be still carved up by Total and CNOOC too, also some sort of deal with UNOC and TNOC. These will not operate on charity, but as a benefactor of the Republic itself.
The public should know this, because it is public resources, state resources and oil exploitation on public land. The companies are using licences and also the same licenses to transport the crude oil in the pipeline from Lake Albert to Port Tanga. Therefore, it is needed to get this knowledge to show the price, the agreements and the possible perks. Because, we don’t if they even have strings or not.
We should wonder why its confidential and kept a secret. The companies should also be displeased, unless they like to exploit without any transparency. Because, these deals and arrangements haven’t been made transparent or with accountability. It has been done in the chambers of Entebbe and in Tanzania. The general public will only see a fraction and not know the full extent.
That is a deliberate action by Presidents and their handlers. The UNOC, TNOC, Total and CNOOC can operate without to much scrutiny and just enjoy the cheers. There is a need to know, but don’t expect it. Since, the GoU and GoT haven’t delivered this in past, neither has the GoU showed anything from the previous deals with Heritage/Tullow. Why should they suddenly change of heart?
I don’t think so… unless there is a sudden miracle. If not … if there is a shady deal and one company feels used and will take it to an international court. Then, we will see some evidence of what went down. However, until then… we only know the bits and pieces. Peace.
Last year in September 2019, the Farm Down Agreement of Tullow Oil was supposed to be traded to Total E&P Uganda. This was a long and prolonged negotiations, as the British Tullow Oil has been in dispute of taxation and payments of fees the Government of Uganda, which was deemed as the “Presidential Handshake”.
What happen yesterday with the Financial Investment Decisions (FID) of Total, as it has taken over the stakes of Tullow Oil. While agreeing on added terms in combination with the China National Offshore Oil Corporation (CNOOC) to drill after petroleum in various of blocks on Lake Albert, also build the petroleum pipeline from Hoima to Port Tanga, Tanzania.
The Port Tanga and Pipeline agreement was sealed in 2017 between the Government of Uganda (GoU) and Government of Tanzania (GoT). That after lots of meetings and consultations between the parties. There was some who even tried to get it Port Lamu in Kenya, but that was ditched. Also, causing a rift between Dodoma and Nairobi.
Now, the next step is that Total and CNOOC is able to get a Host Government Agreement (HGA) for the East Africa Crude Oil Pipeline (EACOP) project. That was agreed by the parties in Entebbe for the territory of Uganda, but it is not sealed with Tanzania.
Though it should be in the interest to sign an agreement with President Magufuli and the CCM. Now, that they have fixed the first part and the licences to drill on Lake Albert. Total and CNOOC needs the HGA in Tanzania too. That will be beneficial for the Republic there too.
This has been a long time… the first reports of agreements and production licenses to blocks on Lake Albert in early 2000s. This was agreements being made between the government and the Tullow/Heritage and ENI as well. Which later has caused rift between the companies and the Republic, as the Oil Companies wasn’t willing to pay taxes and the Uganda Revenue Authority (URA) needed to win a Court Case in 2014 to get taxes owned paid by Tullow, as they had to cover the loss of taxes from their acquisition of Heritage Oil.
So, the news today is big. Maybe, the President got another Presidential Handshake, as the Tullow Oil Taxes case brought a lot of kickbacks. The deals sealed between Museveni and Total is a secret. Therefore, only the agreement of what it does is in public, but not the costs, the tax-grade and the limitations of it. Total and CNOOC can have gotten it for cheap for all we know.
That is something for the time to tell. Now, the Lake Albert Basin, the Lake Albert Blocks for drilling is sealed, which has been in question and awaited a verdict for years. The same has the years of a agreement for a company to build the pipeline and pay the rates for having the operation going.
Now, there is one final agreement that needs to be sealed in Tanzania. By all means, the Republic’s needs also to settle the routes, the land-acquisitions and other arrangements too. While the other HGA is necessary to get started. As the process is now moving. The initial agreements are made, but the companies still needs goodwill elsewhere to make this pop-off. This will be years in the making. As the state of Uganda is scheduling a Oil Refinery in 2023, but that depends on everything else goes as planned at this point.
And in this business, at this point, everything that can be stalled and discontinued can happen. Even, if one of the companies stops seeing the financial viability and lack of profits. Than, they might suspend and try to sell the Producing Licenses Agreement to someone else again.
I wouldn’t be shocked, if Total bails out or something. There been so many companies involved and we are still not starting production. This being in the works since the early 2000s with the modern day deals and new arrangement for petroleum activity in the Lake Albert basin. That is why I am reluctant. Because, at any given moment, someone gives way and it sto
In the Uganda Investment Authority (UIA) in 2019, the UIA released a report, the 3rd Edition of “Bankable Projects – Viable Investment Opportunity” among those are tourism investments, which is one point of attracting more tourists to Murchison Falls. Where they are proposing building High-End Cottages, Luxurious Hotels, House-Boats, Cruise Launches, Walking Safaris for instance. So, the state and its authorities has the ideas for what’s of value at Murchison Falls. However, today they back-tracked their earlier verdict of August 2019 and plan to do it anyway. Which is disgraceful and possibly starting a process, which will cause harm to one of the national treasures. That is world renown, but still that doesn’t seem to matter.
As the Electric Regulatory Authority clarification of June 2019 said:
“ERA is mandated under Section 29 of the Electricity Act, 1999 (‘the Act’), to receive and process applications for licenses. In line with this mandate, on 25th April 2019, ERA received an Application for a permit to conduct feasibility studies from Bonang Power and Energy (Pty) Limited” (…) “A permit issued under sub-section (1) of Section 31 of the Act allows the intended applicant to carry out studies and any other activity that may be necessary to enable the intended applicant to prepare an application for a license to construct a Power Plant” (ERA – ‘CLARIFICATION ON THE NOTICE OF INTENDED APPLICATION BY BONANG POWER
AND ENERGY (PTY) LIMITED TO ESTABLISH A 360 MW HYDROPOWER PLANT NEAR
MURCHISON FALLS’ 11.06.2019).
So, ERA have given the Bonang Power and Energy a permit to do assessment and ability to do a conduct feasibility studies of the Murchison Falls for possible building a power plant there. This is the first step of plenty to ensure the falls in the National Park are built. It starts with a permit and later another permit and memorandum of understanding between the Republic and the company.
Also, the letter of Association of Uganda Tour Operators Ltd called ‘PLANNED CONSTRUCTION OF HYDROPOWER DAM OVER THE MURCHISON FALLS’, where it says: “Murchison Waterfalls from the top all the way to the delta at its confluence with Lake Albert including Uhuru Falls, is a Ramsar site, designated to be of international importance under the Ramsar Conventionon Wetlands; an intergovernmental environmental treaty established in 1971 by UNESCO, which Uganda is also signatory to. His Excellency Yoweri Kaguta Museveni the President of the Republic of Uganda has numerous times mentioned that we have more electricity than we are consuming and surplus is increasing. This cannot be the time to trade-off a natural wonder of the world for an electricity dam” (Association of Uganda Tour, 10.06.2019).
As this continues… the Minister said this in August 2019. Peter Lokeris MP, Minister of State for Mineral Development statement on the 21st August 2019: “On 25th April 2019, the Electricity Regulatory Authority received a Notice of intended Application for a Permit from Bonang Power and Energy (Pty) Limited to undertake feasibility studies and other related activities in respect of the proposed 360 MW Uhuru Hydropower project to guide the decision on development” (…) “These facts were brought to the attention of Cabinet for discussion and further guidance. Colleagues, I wish to report to parliament that Cabinet decided that Uhuru site and Murchison Sites should for now not be developed for hydropower generation. The site will be retained as it is and conserved for tourism activities” (Lokeris, 21.08.2019).
UWA says irs unthinkable:
“The Construction of a dam at Murchison falls was termed as “unthinkable” by Uganda Wildlife Authority and vowed to fight the project. Similarly, part of Bugoma forest home to over 500 chimpanzees is to be destroyed for sugar cane plantation. Situated in the hearty of Murchison falls national park, Murchison falls is one of the natural wonders after Which Uganda was called the “Pearl of Africa”. The falls is undeniably one of the top tourist attractions in the country, a must visit by most travelers on Uganda safari” (Uganda Gorilla Tour – ‘UWA To Fight The Construction Of A Power Dam At Murchison Falls By ERA’ 18.06.2019).
So today, this is the news still: “We should investigate through the implications of the power dam. We have backtracked on an earlier decision where Cabinet had resolved that the feasibility study should not be conducted,” Kiwanda said. Government says that as Uganda’s economy is getting industrialised, more electricity needs to be added to the national grid to power the industries. The proposed power dam is estimated to produce 360MW of power” (Norman Mwambasi – ‘Murchinson Falls in danger as Cabinet resumes plans of power plant construction, 28.11.2019).
We know that the state has back-tracked today. That Ernest Moloi is surely on the right way and the path of succeeding in building a power plant in the middle of Murchinson National Park. That should be avoided. That is if the UIA and UWA get their way, then the public have saved one area.
The State told in August it would ditch the permit study the falls for a possible dam. That’s the first official step and also touching it. To see if there is viable possibility to build a dam, which the fall can create a hydropower plant there.
This is one of the places the state should avoid. Just like the Sipi Falls and others, which are landmarks and unique. Where they can continue to take care of the environment and still earn foreign currency on the tourists visiting. The last few years statistics too, shows that the Murchison Falls Park is the most popular to visit after Queen Elizabeth National Park.
Its really tragic that the state opens up for this in November, when they said no in August. The outcry will be the same and the proof that short-term gains is more important for sustainable growth for this government. Everything can be destroyed and measured into hard currency, without any consideration for the aftermath.
Murchison Falls should be saved. Point blank. Period.
In the newest report of Oil Roads, which is expected to borrow funds for. The China Exim Bank is supposed to be provider of 85 % of the cost of the operation and building of the roads in these projects. I will only look into one of them, as I have previously looked at this significant one.
This is the Hoima-Butiaba-Wasenko Road. A project that was supposed to start in 2015 and was clocking in funds from the state budgets in 2017. Back in 2015, the road was estimated to cost $126m USD. Today, with the recent report, the same road is costing $179,538m USD. That is jump of nearly $50m in a five years time. In addition, of these bloated funds, 85 % of it will be loaned from China and the rest 15% covered by the Government of Uganda (GoU).
In 2017, this project was designated the China Communications Construction Company (CCCC), which signed a deal in January 2016. However, by the time of the report 2019, it is another Chinese Company who has the contract. This is Chongqing International Construction Corporation (CRC) Ltd. With the recent contract, the loans are clearly getting direct back to the Chinese, as their corporations are the ones with the contracts to build. A clever way of borrowing and then getting returns.
With this mind, we can see the changes, see over the years how the price has changed. If Members of Parliament was afraid of the price per kilometre in the past. They should be now. As the changes of price on the same project has changed significantly. There is no doubt, that the Chinese government are getting added loans on each of the packages in this deal. As this is just one of the roads in question.
This is 111km is now costing 659,921,964,460.17UGX in Ugandan terms or 659bn shillings and that equals to about 5,9bn shillings. Therefore, the prices has sky-rocketed and the price per kilometre is abnormal and extremely costly. The overpriced asphalt and the consultation is in absurd levels. The previosly estimated price for this road was about 444bn shillings. Therefore, we can see rising price between the years in both currencies. About 200bn shillings growth in 5 years.
To many cooks and too few ingredients. They are boiling soup on nails on this one. Wonder how this will end. As I felt in 2017, that the pricing of this particular road was a bit too much, but now they have just escalated it.
We can wonder whose eating, but someone is. We just don’t know who, because there been designated funds to build this one in the past and it has still not commenced. Surely, this road will be built, but at what point. However, with the added loans, the pressure should be on. Also, to secure the oil so it makes financial sense too. That the added value is there. It got to be. Because this project is over the top. This is the real OTT service, paid for by the Chinese and the tab is all taken by the Ugandans. Peace.
In the Republic now its official that the companies that was supposed to buy the stake and the licences to drill for oil from Tullow Oil have backed out. This means, that Total and CNOOC is not operating or willing to foot-the-bill that Tullow left behind.
This is all a play for guards, they all want the slice of the price, but don’t want to be taxed for it. They want tax-holidays for operating and extracting the oil, even as the incentives to build the oil pipeline to Tanga, Tanzania is put on hold. Since a big part of the Lake Albert Basin is still in question. Since, the Tullow Oil doesn’t want to deal with the taxes in question.
Tullow Oil have to back-pay taxes, which it lost in court. They are obliged to pay these, but want the other companies to foot-the-bill, since they will drill and exploit situation. The others gather that this has occurred before they did and that Tullow should pay it. That is why it’s a dead-lock. Because, none of the companies want to pay the taxes.
This is the infamous taxes, which led to the Presidential Handshake drama and wobbling defence of it. That made all the people and civil servants dance for a hot minute. Now, we are seeing the deadlock because of this one.
The state is allowed and should tax the ones whose operating in their territory. Without a question or without any hesitation. Because, they should be able to pay for your rights to be able to do business somewhere. However, here it’s a mismatch of the amounts gained in courts and the planned surrender of Tullow.
Tullow considered that their Farm-Down deal with Total and CNOOC would clear their old debts with the Republic. Instead, the other companies want its shares, but not its past invoices. Which is natural. Because, your paying for other peoples misfortune and cost of operating. That is simple math.
It is Tullow that has done business, who has been operating and whose been in charge of certain parts of Lake Albert Basin. They got to stay responsible. Now, they just looking like a shell-company wanting to be a tax-evasion corporation, who puts their costs on their trading partners.
Within that reason, its understandable that Total and CNOOC wants to have other options and other obligations, also pay their taxes and returns, if they start to drill on the licences previously kept by Tullow. But at this moment, the company think it can get the hook and crook.
Because the victory of the President Handshake isn’t a bargain, but a huge toll for the company. That is why it wish to push the envelope to someone else. This is not natural, but not without a consequence. That they are backing out and giving way. Instead of going into business on these sectors of Lake Albert.
The loss, is also the proposed earnings, the supposed development of the oil sector and the pipeline to Tanzania. As everything stops and shuts its operations. As the CNOOC is sacking employees and who knows what Total does too. Tullow might even do it too, until they find someone who wants to pay their bills. Because, from history they showing that they don’t want too.
The state one, what was theirs, but the companies doesn’t want to pay to play. They want tax-holidays and a free ride to the promised land. That doesn’t happen and therefore, the stalemate and yet another set-back for the oil development there. Peace.