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Uganda says pipeline investors want higher tariff,and may delay first oil

Uganda says pipeline investors want higher tariff,and may delay first oil

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Uganda said on Wednesday investors in its planned crude oil pipeline want a higher tariff than originally agreed, raising doubts over its targeted date for production to start.

In 2016 landlocked Uganda picked a route through Tanzania to the country’s Indian Ocean port of Tanga for the pipeline to transport crude reserves from fields in its west near the border with Democratic Republic of Congo.

The route, Ugandan officials said at the time, was chosen on condition that the transit tariff would be capped at $12.20 per barrel shipped through the pipeline.

Robert Kasande, permanent secretary for the ministry of energy and mineral development told Reuters investors in the pipeline now wanted a higher tariff.

“Yes, they want it (tariff) to exceed $12.20,” he said in an interview.“Our quest is that we have a least cost tariff to be able to maximise on our crude sales, because if you charge me a lot to transport through the pipeline then I will sell nothing. So the discussions we are having are intended to exactly achieve that. A tariff that is affordable.”

Kasande did not say which firms they were negotiating with but France’s Total has previously indicated it wanted a stake in the project.Total co-owns Uganda’s fields together with China’s CNOOC and Britain’s Tullow Oil.

Uganda had aimed to commence commercial crude production in 2020 but delays caused by slow implementation of infrastructure and disagreements with oil firms over taxes and field development strategy has made that target hard to achieve.

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