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East African Oil: A fine line between human rights and economic growth

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Extinction Rebellion Cape Town (as part of the #StopEACOP coalition) hold a global day of action outside the Standard Bank Cape Town Business Centre, targeting multinational banks (specifically Standard Bank, Sumitomo Mitsui Banking Corporation and Standard Chartered) for their ‘hypocritical support’ for a major fossil fuel project in Africa – the East African Crude Oil Pipeline. – Picture: Ayanda Ndamane / African News Agency (ANA) / February 22, 2023

By Sizo Nkala

The East African Crude Oil Pipeline (Eacop) project, a daring $5 billion (about R89bn) initiative that seeks to construct a 1,443km oil pipeline on a 30m-wide corridor stretching from the Hoima District, west of Uganda, to the port of Tanga, on Tanzania’s east coast, has been the subject of criticism by environmental and human rights organisations.

The pipeline is projected to transport 216,000 barrels of crude oil a day, which will make Uganda an important oil exporter in the region.

Eacop Limited, a joint venture tasked with managing the pipeline involving Total Energies SE, the Uganda National Oil Company (Unoc), the Tanzania Petroleum Development Corporation (TPDC) and the China National Offshore Oil Company (CNOOC), secured the licences to construct the pipeline from the respective authorities in Tanzania and Uganda at the beginning of 2023.

Total Energies, the French oil giant, is the majority shareholder in Eacop, with a 62 percent stake, while Unoc and the TPDC have 15 percent each and the CNOOC claims the remaining 8 percent.

The pipeline and its accompanying installations will take up 5,140 hectares of land, affecting more than 13,000 people, who will have to be relocated to make way for the project. This is in addition to the more than 100,000 people who have been reportedly displaced around the oil fields in Hoima.

Although the companies involved and the governments of Uganda and Tanzania have claimed that the land acquisition and compensation processes were above board and conducted in line with international best practices, this has been debunked by environmental activists and human rights organisations.

Human Rights Watch (HRW) released a scathing report last year, accusing the Eacop project of disregarding the human rights of the displaced people.

The report said most families had lost their livelihoods as they had to give up their farming land to the project before they received compensation. That resulted in food insecurity and children failing to attend school because of the inability to pay school fees.

Despite 90 percent of the people having received compensation, the affected residents said they faced long delays in getting the compensation, which they felt was inadequate.

Moreover, affected families told the HRW that they had been forced to sign the land acquisition and compensation agreements which had been written in English – a language many barely understood.

The families were offered cash as compensation, which is inconsistent with international finance corporation (IFC) performance standards that require that displaced people be compensated in land.

The Eacop companies are also alleged to have failed to honour their promises regarding grave relocation. Environmental activists have campaigned against the project, arguing that its route would disturb sensitive ecosystems and that it ran against the spirit of the 2015 Paris Climate Agreement which sought to limit the global temperature rise to 1.5ºC above pre-industrial levels.

Central to the fight against climate change is the drastic reduction in the use of fossil fuels, whose greenhouse gas emissions significantly contribute to the increase in global temperatures.

The Climate Accountability Institute estimates that the project will produce emissions equivalent to 379 million tons of carbon dioxide in its lifetime, thus setting the world back in the fight against climate change.

Moreover, the pipeline will pass through protected and sensitive ecosystems such as the Murchison Falls National Park, the Murchison Falls-Albert Delta Ramsar site, the Taala Forest Reserve, the Bugoma Forest and the Biharamulo Game Reserve that host several endangered species.

The Petroleum Authority of Uganda says the pipeline route was chosen because it was more secure and had manageable logistical constraints. The presence of an operating port in Tanzania was another reason they settled on the specific route.

However, the strong and sustained campaign against the pipeline, which has been going on for years, seems to have thrown the project, which needs a $3bn injection, into financial uncertainty.

Some of the world’s biggest banks, among them JP Chase Morgan, BNP Paribus, Natixis from France, Sumitomo Mitsui Bank from Japan, the HSBC and Morgan Stanley, have publicly distanced themselves from the Eacop project, leaving it with limited funding options.

Major insurance companies such as Aegis, Canopius and Britam have also dissociated themselves from the project, seemingly in response to public pressure.

However, those arguing for Eacop cite the economic benefits accruing from the project, including export revenues, increased access to energy and prospective employment in oil fields and pipeline management as enough grounds for the construction of the pipeline.

The Eacop project highlights the tension between environmental protection and economic development. While Uganda and Tanzania could see billions of dollars in revenue generated by Eacop, this has to be balanced against the environmental and social impact of the project.

Indeed, in a region like East Africa, which has seen frequent natural disasters attributed to climate change, the environmental impact of major projects like the Eacop must be taken seriously.

* Dr Sizo Nkala Research Fellow at the University of Johannesburg’s Centre for Africa-China Studies

** The views expressed do not necessarily reflect the views of The African