On Friday, Uganda’s Presideent Yoweri Museveni presided over the signing of the Host Government Agreement (HGA) for the East Africa Crude Oil Pipeline (EACOP) project between the government and Total.
The Signing of the HGA signifies that the oil companies represented by Total, and Government have reached agreement on the commercial framework for the Lake Albert Development Project.
Museveni congratulated Total for concluding the deal saying it, “moves us closer to production of crude oil in Uganda. It has taken long but I want to assure Ugandans that this was deliberate. We have gone through every item.”
He added, “Uganda is a rich country, with oil as a small fraction of this wealth. The big part is agriculture, industry, services and human resource. Oil, however, can be a good spark for transformation. It will bring money which we shall use to develop infrastructure, science and technology. This money will not be used for consumption. We shall use it to enhance our durable capacity. Icongratulate our Ugandan team, they are good negotiators. We now have a good petroleum team in terms of science, economics. They always help me because they know everything that’s happening in the world in the oil sector. “
The HGA is an agreement between a foreign investor and the local government which is intended to reduce financial and political risks posed to investors by sudden changes in national laws.
It outlines issues pertaining to tax and other revenues to be accrued from the project; participation of Tanzanians in the project and how to deal with challenges that might arise during implementation of the project.
The deal comes months after Total acquired 33.334 percent of Tullow Oil’s stake thus paving the way for the French oil giant to own a 66.7 percent of upstream stake in the project.
The Uganda government delayed sale of Tullow shares for months over tax issues until expiry of the Production Sharing Agreement (PSA) leading to stalling of the project.
According to reports, HGA talks with Tanzania were slated to start after the talks between Total Oil and Uganda are concluded.
Museveni has since promised to follow up with Tanzania leader John Pombe Magufuli on the country’s host agreement.