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Magufuli to Museveni: Oil pipeline is more important than taxes

President Museveni chats with Tanzanian President John Magufuli at the sidelines of the African Union Summit in Addis Ababa, Ethiopia in February 2017 (PHOTO/File)

DAR ES SALAAM – Tanzanian President John Pombe Magufuli has urged his Ugandan counterpart Yoweri Museveni to prioritise the construction of the crude oil pipeline over demanding taxes from oil companies.

Last week, French oil giant, Total E&P, the lead developer of the oil pipeline, announced that it was suspending the project, firm citing “uncertain business” environment in Uganda following a collapse of a deal for Tullow Oil company to sell its stakes to Total and China National Offshore Oil Company (Cnooc).

And on Friday, Mr Magufuli, speaking at the Tanzania-Uganda Business Forum in Dar es Salaam on Friday, said tax issues were delaying the oil pipeline project.

“We are late. We are still sleepy,” he said, adding that Mr Museveni has to “sacrifice short term gain and go for long term gold.”

“Let us do the pipeline and create jobs,” he added.

Tullow Oil failed to sell 21.5 percent of its stake for $900 million to its partners – France’s Total E&P and China’s Cnooc. At the heart of the dispute was the definition of the amount of money that Tullow Oil was to get from the transaction. Tullow Oil announced that out of the $900 million it would get from the sale of 21.5 percent of its stake, $700 million would be reinvested in the development stage of Uganda’s oil industry as part of its share of the contribution.

Government, on the other hand, looked at the $700 million as an earning and, therefore, imposed a capital gains tax on it. This difference in opinion would stall the negotiations for a while.

But President Magufuli said that Uganda Revenue Authority officials should not delay the project for the benefit of a large population.

“Sacrifice some of the short term gains for the long term and your URA officials should not delay you, actually we wanted this pipeline to be named Kaguta Pipeline when it opens,” said Mr Magufuli amid laughter.

He said the delay in executing the Hoima-Tanga East Africa crude pipeline which would be the longest is costing the country in revenue.

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