Tanzania Disburses $80m for EA Oil Deal Shareholding
Posted on : Thursday, 24th February 2022
Tanzania has already disbursed some $80 million (about Sh184 billion) as a part of its commitment in financing the East African Crude Oil Pipeline (EACOP), The Citizen has learnt.
The director general of the Tanzania Petroleum Development Corporation (TPDC), Mr James Mataragio, said the parastatal oil company would have to pay a total of $308 million (about Sh708.4 billion) in the construction period covering the next 3 years.
The project cost, he said, which is estimated at $3.5 billion (about Sh8.1 trillion), would be financed through 40% equity from the 4 shareholders, while 60% will come from international lenders’ loans.
According to the shareholder agreement, TPDC and Uganda National Oil Company both have holdings of 15% each, while China National Offshore Oil Corporation (CNOOC) holds eight percent and France’s TotalEnergies has 62 %.
Dr Mataragio said they paid their 1st cash call for the 1,445km project immediately after the announcement of the Final Investment Decision (FID) for the vast regional oil pipeline in Kampala on 1st February this month.
“We will have to pay for the 15% stake in the equity fund,” Dr Mataragio revealed to The Citizen on 4th February.
Dr Mataragio added: “We will be paying a cash call every month until the completion of the project. The amount to be paid every month will be determined by the size of activities in a given month.”
The FID for EACOP was announced at a ceremony in Kampala by the heads of France’s TotalEnergies and the China National Offshore Oil Corporation (CNOOC).
Dr Mataragio said the announcement of the FID made a crucial step towards the implementation of the project which is expected to generate over 10,000 jobs.
“With the announcement of FID, we are ready to start physical activities because EACOP can now announce the award of tenders to supply raw materials to feed the project,” he hinted.
Dr Mataragio further explained that at first, the announcement of tender awards was put on hold because the company to take care of the matter had not yet been formed.
Now, he said, the company dubbed EACOP was formed along with the management and board of directors.
The company whose headquarters are in the UK, have branches in Tanzania and Uganda.
“We need to prepare for the opportunities brought along with the EACOP so that we don’t just sit back and observe others enjoying it,” noted Dr Mataragio.
Tanzania Private Sector Foundation (TPSF) executive director Francis Nanai told The Citizen that local companies had what it takes to tap the opportunities on their way.
However, for that to happen, he urged local enterprises to form joint ventures for them to thrive.
“We need joint ventures if we are to have strong financial muscles enough to offer equipment in the construction period,” recommended Mr Nanai.
Adding: “We need a competent labor force and technology for local firms to deliver products and services that meet international standards.”
TPSF applauded local content regulations, which have paved the way for Tanzanians to participate in 12 projects.
Among the ring-fenced sub-projects are transportation, supply of food and drinks, hotel lodging and catering, office supplies, land surveying, lifting equipment, locally available building materials, civil personnel, communication services and waste management.
