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Tanzania/Uganda: TPDC to retain 15% Eacop stake


Issue 438 - 13 May 2021

Tanzania Petroleum Development Corporation (TPDC) appears to have decided to retain its 15% stake in the East African Crude Oil Pipeline (Eacop) and not to exercise an option to reduce its holding to 5% in the project, which is expected to come to the international market for debt finance later this year.

TPDC managing director James Mataragio told African Energy the national oil company was keen to maintain a shareholding, although that depended on cabinet approval. Speaking in Dar es Salaam on 29 April he said: “I hope that cabinet will be meeting soon chaired by President Samia [Suluhu Hassan], who has urged a speedy implementation of the project.” He added that all necessary preparations for the project have been completed, following the 11 April signing of the final deal in the Ugandan capital Kampala (AE 436/21).

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 8% and France’s Total has 62%. In a statement to the Ugandan parliament on 28 April, energy and mineral development minister Mary Goretti Kitutu said Tanzania had a right to reduce its holding to 5% within 30 days of the shareholder agreement being signed. If TPDC took up this option, CNOOC would have first refusal on the shares, with Total taking up anything left over.

Mataragio said the project cost, which is estimated at over $4bn, would be financed through 40% equity from the four shareholders, while 60% will come from a loan. “We will have to pay for the 15% stake in the equity fund,” he said.

Speaking after her swearing-in ceremony President Hassan, who took over from John Magufili following his death mid-March, said she wanted a quick conclusion to strategic projects being implemented by investors, including the 1,445km Eacop and the stalled LNG project. “Let’s speedy up talks to conclude these deals so that work should start,” she said. In a marked change of tone from the combative Magufuli, Hassan said her government would pursue a policy of mutual understanding and predictability with investors so projects can proceed.

 

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