France’s TotalEnergies and the state-owned China National Offshore Oil Corporation (CNOOC) signed the final investment decision for EACOP, which planned to run from Hoima in Uganda to Tanga port in Tanzania, on 1 February. Standard Bank’s domestic competitors ABSA, Nedbank and Investec have all distanced themselves from the project, as has the African Development Bank.
French media have reported that none of the country’s largest banks will take part, and France’s largest insurer Axa won’t touch it. FirstRand, South Africa’s second-largest bank, in January told BankTrack, a Netherlands-based NGO which monitors global bank financing activity, that it will not finance the project.
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Standard Bank is using an independent environmental and social advisor who has visited the project area and will issue a “full due diligence report” in coming months, a spokesperson for the bank told The Africa Report. The bank will then “make a decision on the way forward.”
The bank’s participation “remains subject to the findings of environmental and social due diligence assessments and meeting the Equator Principles requirements,” the spokesperson said. “It is also subject to a full assessment of the EACOP sponsors’ climate change strategies and targets.” The Equator Principles are a financial-industry benchmark used to assess environmental and social project risk.
The EACOP pipeline would pump enough oil to add up to 34.3m tonnes of carbon dioxide – about seven times the emissions of Uganda and Tanzania combined – into the atmosphere each year, according to South African shareholder activist group Just Share. Research from the Stockholm Environment Institute (SEI) has shown that the pipeline would also endanger population centres, wetland sites, rivers and lakes.
- There are also human rights impacts. BankTrack reports that people whose land is being compulsorily acquired for the project have faced intimidation when they try to press for more compensation.
- BankTrack says about 14,000 households will lose land because of the project.
‘No red flags’
The pipeline is planned to export oil from the Lake Albert basin on the border between Uganda and the Democratic Republic of the Congo. Its length of 1,445 kilometres will make it the longest heated crude oil pipeline in the world. Initial project costs of $3.5bn have climbed to $5bn due higher prices for steel, shipping and finance.
About 460km of the pipeline will be within the freshwater basin of Lake Victoria, which supports the livelihoods of 40 million people. The pipeline will also cross the Rift Valley, one of the world’s most geologically active regions.
- Over 300 seismic events with a magnitude over 4.5 were registered in the region over the last 20 years, according to the US Geological Survey Earthquake Hazards Program.
Standard Bank has not committed to make its due-diligence assessments for the pipeline public. In May 2021, CEO Sim Tshabalala noted that a draft report had raised “no red flags”. The bank will, however, publish its climate-change targets at the end of the first quarter. Just Share says the decision to finally publish such targets was only taken as a result of activist pressure.
- “A credible assessment that is truly aligned with the Paris Goals would exclude the provision of finance to this highly destructive project,” says Robyn Hugo, Just Share’s director of climate change engagement.
Standard Bank is now alone among Africa’s largest lenders in willing to countenance the project.
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