Tanzanian President John Pombe Magufuli on Friday expressed discomfort with the delayed construction on the Ugandan side, of the Uganda–Tanzania Crude Oil Pipeline.
Uganda has since 2016 been lagging behind on the US$3.5billion project, owing to a number of disagreements.
Yesterday, the project suffered a terminal set back after Total SA terminated activities related on the pipeline following the collapse of a deal to buy a stake in Tullow Oil Plc’s interests in the Lake Albert Development Project.
A Ugandan official said Thursday that the pipeline had to be dropped because shared ownership in the project was to be determined upon the completion of the Tullow deal.
Tullow’s plan to sell a portion of its stake to Total and China’s Cnooc Ltd collapsed last week, in the midst of a stalemate over payable taxes on the farm down.
The company declined to pay USD 167Million (About Shs 600Billion) in capital gains tax as assessed by Uganda Revenue Authority, until last week when the Sale and Purchase Agreements (SPAs) expired.
Speaking at the Uganda-Tanzania Business Forum in Dar Es Salaam, Tanzanian leader Magufuli blamed the lack of progress on the pipeline project on bureaucrats on the Ugandan side, calling on his counterpart Yoweri Museveni to take action.
Magufuli also said Uganda should have foregone the tax on the Tullow deal to let the more important oil pipeline project to proceed.
Tanzania under his leaderships, he said, did the same.
“If President Museveni and I agreed to build a pipeline from Hoima up to Tanga; the world’s longest heated pipeline, there are a lot of things we had to sacrifice,” he said.
“It took us going to parliament to cut a portion of taxes payable to our government.”
“Today, I was here asking (Mzee Museveni); why are you delaying this pipeline? Is it because of this small tax that you cannot agree upon? The tax itself is just Shs 600million, and yet you are looking at returns of up to $70billion that you expect. Just sacrifice this small tax; create the jobs, you will get money for a long time.”
Following the collapse of the Tullow farm down deal on August 29th, Ugandan authorities defended their decision to insist on the Shs 600Billion tax, saying this was for purposes of safeguarding Uganda’s interests as well as its laws.
The Ministry’s Permanent Secretary, Robert Kasande stated, “Government’s position is that the assessed taxes should be paid in line with the laws of Uganda, and tax reliefs are treated in accordance with the laws of Uganda.”
But according to President Magufuli, the pipeline project is much more important for Ugandan bureaucrats to be fixated on the tax.
“Your people of Uganda Revenue Authority shouldn’t delay you Mzee,” he said.
“We had even proposed that that pipeline should be named Kaguta Pipeline. We are supposed to move. In business you cannot get super profit. It is sharing and giving. You have to lose a little to gain more.”
Magufuli went as far as calling on his Ugandan counterpart to crack the whip.
“I’ll give you an example; when I came into power, I changed up to 5 commissioner generals,” he said.
“Why let these bureaucrats delay you? It appears that you have been kind, but it is now time to be a bit more tough about this. I wish these bureaucrats could migrate to Tanzania and the Tanzanians went to Uganda, so that I could deal with them for one month.”
Magufuli highlighted a number of benefits that Uganda and Tanzania stand to lose if the project doesn’t succeed.
“More than 20,000 people will be employed,” he said.
“People here have already been employed; those doing feasibility studies. In Tanzania, this pipeline will benefit 8 provinces.
“Once commissioned, revenue collection in Uganda will be will among the highest in Africa according to projections.”
On his part, President Yoweri Museveni briefly made a reassurance about the pipeline, saying that Uganda was “still in control.”
“This oil has been here; it’s been in the ground for 2 million years. It will come out; it is under the control of the government of Uganda.
“Be sure that the government of Uganda will not be found wanting in implementing this project.”