KAMPALA - Rwanda and Uganda Wednesday signed a historic deal for a feasibility study and the laying of a pipeline for the transportation of petroleum products from Kampala to Kigali.

The two neighboring countries signed the deal with Tamoil Africa holdings Ltd, the parent company of Tamoil East Africa which was selected for the development of the soon-to-start Kenya-Uganda extension of the oil pipeline.

The MOU was signed in Kampala on Tuesday by State Minister for Energy, Eng. Albert Butare, Uganda’s Minister of Energy and Mineral Development, Daudi Migereko and Tamoil Africa Holdings Chairman and CEO, Dr Ali Shamekh

‘The parties have agreed to enter into this MOU (Memorandum of Understanding) for the purposes of negotiating the transaction contemplated by this MOU, to make a feasibility study, develop, construct and operate a pipeline extension from Kampala in the Republic of Uganda to Kigali in the Republic of Rwanda,’ states article one of the memorandum.

Under the deal, the Governments of Rwanda and Uganda undertook ‘to provide the necessary legal and regulatory framework for the implementation of the project for purposes of developing and constructing the pipeline’ and are obliged to ‘issue in a timely manner all relevant project–related authorizations, approvals, consents, and letters of introduction in accordance with the respective laws.’

Both countries also agreed to extend to Tamoil Africa the investment incentives provided for by their respective investment laws.

‘Tamoil Africa shall carry out a feasibility study for the project and build own operate and transfer the oil pipeline…. and secure shall secure all the requisite funding for the project; and wholly own it, according to the MOU.

 The memorandum provides that all parties to it shall later ‘enter into the necessary agreements for the implementation of the project which will provide in greater detail the terms and conditions of the project.’

The signatories also drew a roadmap of the whole project, setting August, 2008 as the month in which the final project agreement will be signed.

It was further agreed that Tamoil Africa establish an office in Kigali before the end of this month before embarking on a ‘techno-feasibility study’ between April and May. They agreed that these timelines are subject to changes depending on the realities on the ground.

The deal also provides that any party wishing to ‘withdraw from this MOU shall give the other party six months’ written notice of its intention to withdraw. 

The MOU also shows how parties shall amicably resolve their disputes, and mentions Johannesburg South Africa, as the arbitration venue in the event of disagreements.

The signing was also witnessed by the Chairman of Libyan African Investment Portfolio, Bashir Saleh Bashir, among other Government and business leaders.

The development follows a series of meetings between the Governments of Rwanda, Uganda and Kenya, during which it was agreed that an expeditious process needs to be initiated to lay an additional pipeline from Kampala to Kigali once the Kenya-Uganda line is done.

It is hoped that the extension of the pipeline to Kigali will help cut down the souring prices of petroleum products in Rwanda, a country which depends on Kenya for oil supplies.
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