Uganda and Tanzania have signed a framework agreement on their proposed $3.55 billion crude export pipeline, a key milestone for the project.

Tanzania’s Minister for Constitution and Legal Affairs, Prof Palamagamba Kabudi and Uganda’s Energy minister Irene Muloni signed the intergovernmental agreement in Dar es Salaam Friday.

Uganda is expected to start pumping its oil to international markets in three years.

Ugandan officials told Reuters that the deal covers terms on tax incentives for the project, implementation timelines, the size of the pipeline and local content levels, keeping it on track to complete in 2020.

The signing follows a discussion between President John Magufuli and his Ugandan counterpart Yoweri Museveni, which was held in Dar es Salaam last week.

READ: Museveni’s visit to Dar rescues oil pipeline deal, sets project timelines

The two leaders had on Sunday signed a communique agreeing to begin setting up the East African Crude Oil pipeline (EACOP) plan from Hoima in western Uganda to Tanga, a northern seaport city in Tanzania.

Uganda and Tanzania agreed last year that the 1,443-kilometre crude oil pipeline would go through the latter country after shelving plans to have it pass through Kenya.

The 24-inch diameter pipeline will be heated so it can keep highly viscous crude oil liquid enough to flow.

READ: Kenya prepares to export oil this month

Reporting by Reuters and The Citizen

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