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Uganda, Tanzania pursue Eacop as activists press banks to stop funding

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By GILBERT MWIJUKE


Uganda’s planned $5 billion East Africa Crude Oil Pipeline (Eacop) has become a global flashpoint as climate campaigners intensify pressure on lenders to withdraw from the project, even as Tanzania government issued a construction licence.

Tanzania gave its approval on Tuesday, several weeks after Uganda did the same last month, for the pipeline construction. According to Peter Muliisa, the chief legal and corporate affairs officer at Uganda National Oil Company, this allows the countries to start moving the equipment to the sites.

“This shows the project is irreversible and allows cross-border movement of goods and services,” he said.

Wendy Brown, the Eacop Tanzania general manager, said the approval allows commencement of the construction in Tanzania.

The Eacop, which is planned to span 1,443 km from Lake Albert in western Uganda to the Tanzanian port of Tanga, has been at the receiving end of criticism by climate activists who argue that it threatens to displace thousands of people and degrades critical ecosystems in the two East African countries.

Non-compliance claim

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Mr Muliisa dismisses this concern saying the line will be buried, covered and vegetation restored, allowing cultivation on top of the 30-metre-wide corridor.

On February 22, members of the Stop Eacop coalition were joined by activists from around the world to pressure Standard Bank, Sumitomo Mitsui Banking Corporation (SMBC) and Standard Chartered against funding Eacop.

The activists argue that the project doesn’t comply with the Equator Principles — industry benchmark for assessing, determining and managing social and environmental risk for project financing — to which these particular lenders are signatories.

“Standard Bank (South Africa) and SMBC (Japan) are financial advisers to the project’s operators and reportedly helping to arrange a multibillion-dollar loan to construct Eacop, while Standard Chartered (UK) has expressed interest in financing the project,” 350.org, a New York-based climate-focused non-profit, said in a statement on Wednesday.

The Eacop protests took place in 18 cities, Kampala, London, Paris, and New York, Tokyo, Johannesburg, Frankfurt, Brussels, Sendai, Hoima, Nagoya, Toronto, Fukuoka, Goma, Cape Town, Amsterdam, Copenhagen and Vancouver.

Paris Agreement

Environmentalists say the oil that will be transported through the pipeline will generate up to 34 million tonnes of carbon emissions per year.

While the Paris Agreement’s goal is to limit global temperatures to 1.5 °C, scientists have recently warned that global warming is likely to hit 1.5 °C as early as 2024 due to the proliferation of new oil and gas projects since 2019.

“We urge Standard Bank to reconsider its involvement in the East African Crude Oil Pipeline. Our land, water, and natural resources are integral to our livelihoods and culture, and this pipeline poses a significant threat to our well-being and future,” said Baraka Lenga, climate change activist based in Tanzania.

Despite the backlash, Uganda recently began drilling oil at a site operated by China National Offshore Oil Company (CNOOC) near Lake Albert. French oil major TotalEnergies and CNOOC, the principal backers of Eacop, want to secure all of the project’s financing before the end of March, but 24 banks have already ruled out financing the controversial pipeline due to pressure from green energy campaigners.

Aside from banks, about 20 insurers, including Britam Holdings, have ruled out insuring Eacop.

‘Incomplete view’

For its part, Uganda has defended the country’s oil projects, arguing that climate activists have an incomplete view of the global energy transition.

“Their cause will eventually be ignored,” said Mr Muliisa.

“The global north has gone back to using coal power plants but climate activists focus on small projects in Africa. There is no denying climate change, but we are dealing with energy poverty here,” he added.

Beryl Onyango

Beryl Onyango is a CPA and economics degree holder who has dedicated her career to helping others navigate the complex world of finance. Beryl has spent the past 3 years working as a finance specialist in a fintech company and has 6 years of experience in finance, working with a diverse range of clients and industries. Beryl's expertise lies in budgeting, saving, investing, and retirement planning, but she also has a deep understanding of various other areas of finance. She is interested in financial technology and how it changes how we manage our finances. As a finance writer, Beryl has been sharing her insights and knowledge through her writing, covering various finance and personal finance topics. Her goal is to educate and empower individuals to take control of their finances and achieve their financial goals. In addition to her professional experience, Beryl is a lifelong learner, always seeking to expand her knowledge and stay up-to-date with the latest developments in finance. She is also a strong communicator, able to explain complex financial concepts in a clear and easy-to-understand manner. Beryl believes that financial literacy is the key to achieving financial success, and she is dedicated to helping others achieve their financial goals.

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