A week from today, the government will start evaluating submissions companies made on how Uganda should participate in the construction of a 1,445km crude oil pipeline from Hoima district to the port of Tanga in Tanzania.
Uganda is looking for advisory services on different levels – from legal, financial to commercial interests – as the country prepares to take up a stake in a special purpose vehicle for the crude oil pipeline.
The other shareholders in the special-purpose vehicle will include the three main upstream oil companies and the government of Tanzania. A recent statement from the ministry of Energy and Mineral Development noted that government would start evaluating the consultants on October 24. The ministry will display the shortlist of the final candidates four days later.
During the evaluation, government will, among other things, be looking at a number of issues such as a minimum of eight years of proven experience in similar assignments and a minimum average annual turnover of $1 million in the last three years.
“Experience in energy or natural resources infrastructure projects is a must,” the ministry noted.
The call for consultants is an indication of how fast plans are moving in trying to put in place a pipeline that will export 200,000 barrels of oil per day to the port of Tanga. French oil firm, Total SA, is spear-heading the construction of the pipeline. The project is valued at about $4 billion.
Total has a strong presence in East Africa’s petroleum industry. In May, the company announced that it was widening its footprint in the region’s downstream sector by acquiring Gulf Africa Petroleum Corporation, which operates under the brand name of GAPCO.
Total noted that in Uganda, it has a retail network of 121 service stations, dealing in different lubricants, liquefied petroleum gas, aviation fuel and general retail businesses, commanding an estimated market share of 22 per cent.
It is the construction of the crude oil pipeline, however, that will cement Total’s position as the top oil major in the region. The company has promised to spend more money at a time when oil prices on the international market remain depressed.
Total said it would sustain its capital expenditures between $15 billion and $17 billion per year from 2017, according to the company’s latest financial statement. It is not clear how much of this has been set aside for the Uganda pipeline.
Many other oil companies are, instead, cutting down their expenditures. Uganda allocated funds for oil-related infrastructure, according to the National Budget Framework Paper released this year.
It is the refinery, however, that government continues to consider as its signature infrastructure in the oil industry. Not only does government view the refinery as a cash-cow – the private sector’s import bill for oil products was $536.97 million in 2015, according to Bank of Uganda – but also a source for employment.