OIL PIPELINE STIRS NEW TENSIONS
UGANDAN President Yoweri Museveni’s pragmatic pan-african approach to the East African Crude Oil Pipeline (Eacop) is set to bolster the region’s dominance after all parties signed the agreement for construction to begin.
However, more than 1 million people have objected to the Eacop, with 263 organisations calling on banks not to finance the record-breaking project.
More than five years since the planning stages of the Eacop began, Museveni, along with the newly inaugurated president of Tanzania, Samia Hassan; Patrick Pouyanné, the chief executive of French oil conglomerate Total; representatives of the China National Offshore Oil Corporation, as well as domestic partners Uganda National Oil Company and Tanzania Petroleum Development Corporation, were all present in Entebbe, Uganda, on April 11 as final agreements were concluded, according to a statement by Total.
These involved two separate host government agreements and shareholders’ agreements. Delegates described it as a momentous occasion that would allow for the production of Uganda’s oil as early as 2025, reported Daily Monitor.
The Eacop is a 1 443km crude-oil pipeline that will run from Uganda’s oil reserves in Hoima to Chongoleani on Tanzania’s coast for the purpose of exporting the natural resource, according to the Eacop’s website.
In his opening speech of the Eacop launch on April 11, Museveni said it had taken 15 years since Uganda first discovered its natural gas reserves to reach this point due to “divergent perceptions between us and the oil companies”.
In a show of pan-africanism – which incorporates scepticism towards European ideology and a focus on Africa for Africa – Museveni said: “Why export the oil? Don’t the East Africans need the oil?” as he revealed that he initially did not favour the idea of the Eacop. Museveni therefore initially favoured only an oil refinery, to fulfil the needs of Uganda’s neighbours at a lower price due to a reduction in transport costs.
However, the oil companies only wanted to export crude oil, and the compromise between the parties led to having both a refinery and a pipeline.
Museveni, 76, is satisfied with Tanzania’s involvement, adding that the revenue from the Eacop could ignite Tanzania’s development, which he described merely as a “modest contribution”.
“It cannot compensate for the huge sacrifice Tanzania made for the defeat of Idi Amin and the liberation of the whole of southern Africa (Mozambique, Zimbabwe, Angola, Namibia and South Africa),” he said.
He urged Congo and South Sudan to use the pipeline for their oil, too, going on to say that the pipeline had the potential to serve the region and be a springboard to bigger developments.
Nevertheless, the Eacop involves a $3.5 billion (nearly R50bn) investment directly to Uganda’s and Tanzania’s economies, with a projected increase of more than 60% to the respective countries’ foreign direct investment during construction and further potential to unlock investment in exploring oil reserves in the region, according to the Eacop.
Not to mention employment opportunities, business opportunities and increased infrastructure as the pipeline route is developed.
It will bolster the dominance of East Africa, which is already known as the business hub of Africa. It is a region with diversified economies that the International Monetary Fund said still managed to grow even under the economic crisis imposed by the Covid19 pandemic.
However, in March, 263 civil society organisations, domestic and global, through an open letter urged banks to stop financing the Eacop, in addition to setting up an anti-eacop website.
The organisations argue that it “will not unlock East Africa’s potential” due to a 70% drop in value of Uganda’s oil reserves over the past five years, and risks drowning Uganda and Tanzania in “unsustainable debt, all for oil reserves which will amount to peanuts”.
Other implications of the Eacop include detrimental effects on the communities along the pipeline. An estimated 14 000 households in 409 villages across Uganda and Tanzania will be economically and physically displaced. Threats to water resources and biodiversity are also a reality to the undersigned organisations, as they state that 2 000km² of protected wildlife habitats will be severely impacted.
Added to this is a high probability of a pipeline oil spill, and with onethird of the Eacop located in Lake Victoria, it could cause degradation and pollution in the largest life-giving freshwater lake in Africa.