at loggerheads

10 questions on Uganda’s controversial oil projects

By Musinguzi Blanshe

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Posted on August 22, 2023 08:33

Ugandan riot police officers detain an activist during a march in support of the European Parliament resolution to stop the construction of the East African Crude Oil Pipeline, on environmental basis, near the European Union offices in Kampala, Uganda October 4, 2022.
Ugandan riot police officers detain an activist during a march in support of the European Parliament resolution to stop the construction of the East African Crude Oil Pipeline, on environmental basis, near the European Union offices in Kampala, Uganda October 4, 2022. REUTERS/Abubaker Lubowa

Uganda says its oil projects, including the East African Crude Oil Pipeline, will unlock value for development; environmental groups say they are unethical. The Africa Report seeks both sides of the story.

As two construction sites in western Uganda bustle with workers to bring to life a major oil project, the East African Crude Oil Pipeline (EACOP), climate activists continue to push in the opposite direction.

French oil and gas giant TotalEnergies and China National Offshore Oil Corporation (CNOOC) are developing Uganda’s largest-ever project, with an estimated investment portfolio of $15bn-$20bn.

Contentious issues remain over the project’s impact on the environment, possible human-rights violations, and compensation for people affected by the pipeline, which will transport oil from Western Uganda to Tanzania’s coastal city of Tanga.

In July, Human Rights Watch released a report with this message to financial institutions and insurers: ‘To combat the expansion of the fossil fuel industry and its effect on climate change, do not provide support, financial or otherwise, for development of EACOP or associated projects.’

The Ugandan government argued that the report was ‘malicious and misguided’, and ‘not based on available information or engagement with Ugandan institutions’.

The Africa Report interviewed Ugandan officials, climate activists and researchers to get a balanced view of the thorny issues that continue to fuel polarisation over the project and the wider oil sector.

1. What are Uganda’s carbon emissions?

In its report, Human Rights Watch said the EACOP is a major emitter of greenhouse gases. Referring to a report by the Climate Accountability Institute released last year, the organisation notes that EACOP will produce 379 million tonnes of carbon dioxide equivalent in its lifetime.

The government disputes the figure. Irene Batebe, the permanent secretary of Uganda’s ministry of energy and ministry development, tells The Africa Report that “the government’s estimates of the carbon emissions for the 25 years of the project is 4.084 million tonnes”.

She argues that the project’s carbon emissions will be insignificant.

2. When is the right time for Uganda’s energy transition?

To mitigate the impact of climate change, countries and companies around the world are transitioning to low-carbon projects in the medium term and net zero-carbon projects in the long term.

The question for developing countries such as Uganda is: When is the right time for such a transition?

For climate activists, the time is now. ‘EACOP will be an ongoing disaster for the planet, contributing to the climate crisis,’ Human Rights Watch said in its report.

Uganda argues that it can’t forfeit its oil, which it sees as a lynchpin for economic transformation. Like other African countries, Uganda also says it shouldn’t be blamed for carbon emissions from developed nations.

For instance, the Global Carbon Project estimates that the country produced 5.8 million tonnes of CO2 in 2021, which is almost five times lower than London city’s 2021 carbon emissions.

Batebe says Uganda understands the “potential and limitations” of renewable energy and is pursuing energy transition in line with the African Union’s resolution, which encouraged countries on the continent to make use of all their energy resources. She also says the government is integrating solar energy in the EACOP project, which is carbon neutral.

“The EACOP has integrated the use of solarisation and the national grid, which are renewable energies, as the sources of power,” she says. “Uganda’s legal framework ring fences oil revenues for infrastructure and development projects, which includes renewable energy projects.”

3. Who will fund the EACOP?

Even as CNOOC and TotalEnergies dash to put up critical requisite infrastructure for the oil project to start drilling, questions on who will fund the EACOP still linger.

Climate activists have targeted several global financial institutions, demanding them to publicly refrain from funding the pipeline construction.

The latest bank to make a public commitment was Japan’s Sumitomo Mitsui Financial Group Inc in May, which was a financial advisor on the project.

However, South Africa’s Standard Bank has not ruled out bankrolling the project. Uganda’s government also remains certain that it will secure funding from China.

4. Will people who have lost their land be properly compensated?

The anti- and pro-EACOP camps have disagreed on various components of compensation for the affected persons.

Activists have argued that the process has been fraught with abuses in which government and oil companies undervalued the land and delayed paying the compensation.

Last year, the European Parliament passed a resolution calling for the oil project to be halted until ‘grave human rights’ concerns are addressed.

There is also no consensus on the total number of people affected. Human Rights Watch and other activists have put the figure at over 100,000, but Uganda’s government has put the figure at just 13,546 persons, Ugandans and Tanzanians.

In an interview with The Africa Report, Felix Horne, a senior environment researcher and lead author of the human rights watch report on the EACOP, said the figure offered by Uganda and TotalEnergies is that of project-affected households not individuals.

“Total Energies uses the term ‘project affected persons’, but despite the name, this refers to the number of households, not the number of individuals,” he said.

“The ‘over 100,000’ figure is from a calculation previously carried out by Les Amis de la Terre, which, generally speaking, takes the number of households from project documents multiplied by the average household size.”

5. Are activists being intimidated and repressed?

For the past four years, activists have claimed that they are being harassed and intimidated by Ugandan officials and oil companies.

In 2021, six staff of the Africa Institute for Energy Governance (AFIEGO), a leading civil society organisation, were arrested in Uganda over legal issues after the government had ordered the organisation to close down for reportedly operating without a licence.

Several Ugandan and international activists, as well as people living where TotalEnergies is drilling oil, sued the company in June in a French court. Among the arguments made in the case was that ‘several plaintiffs suffered threats, harassment and arrest simply for daring to criticise oil projects’.

Aware that local NGOs are working with more powerful NGOs in Europe, Uganda’s President Yoweri Museveni said in February 2022 that activists should be given as much access to oil fields as they want.

“Let the NGOs sleep in the bush if they want and don’t mind the mosquitoes,” he said, arguing that the country was hiding nothing from those who wanted to scrutinise the project.

6. Will the EACOP be a ‘disaster’ for the environment?

Environmental activists have warned that the EACOP will have devastating impacts on the environment across the two countries that the project will affect, even though no details have been provided.

During the debate at the EU parliament last year, a legislator argued that the pipeline “goes through 16 protected areas and will kill hippos”, and will affect “230 rivers which serve 44 million Ugandans”. Baffled by the submissions, Ugandan officials asked EU parliamentarians to come to show them the 230 rivers.

In its report, Human Rights Watch says the possibilities of ‘pipeline ruptures, inadequate waste handling, and other pollution impacts’ will cause significant damage to the ecosystem.

7. Will the Tilenga oil project dent tourism?

TotalEnergies will be drilling for oil in Murchison Falls National Park – Uganda’s largest park, which attracts more than 50,000 visitors per year.

The tourism sector is Uganda’s top forex earner, contributing about $1.6bn annually, which is estimated to be 7.7% of the country’s GDP. So will environmental damage, and the bad publicity around the project, deter visitors?

TotalEnergies and the government say they are aware of the effects of oil activities on the environment. Total says it is permitted to drill an area ‘representing 10%’ of the national park, claiming that it has ‘intentionally restricted development to less than 0.05% of the surface area’.

Batebe says TotalEnergies has been allowed to drill only 10 pads in the national park, adding that stringent measures, such as ensuring that pipelines are buried underground and vegetation restored, have been implemented. She also says TotalEnergies has not been allowed to construct man camps inside the park.

8. Will Uganda’s oil projects take a toll on fishing?

CNOOC will be drilling oil from two to seven kilometres deep into Lake Albert. Such drilling activities, climate activists have said, are a recipe for disaster.

Lake Albert, which feeds water into River Nile, is considered part of Murchison Falls-Albert Delta Ramsar wetland system. It is the main wetland system in the region where oil will be drilled. In its report, Human Rights Watch notes that over one million people in the Murchison watershed depend upon it for fishing and water.

As for Lake Albert, the report notes it “is the largest contributor to Uganda’s fishing industry, sustaining an estimated 43% of the country’s fisheries”.

The Uganda National Oil Company argues that it is using ‘noise suppressing technology‘ and working with environmental agencies to ensure the ‘strictest environmental and safety practices and technology in the planning execution and decommissioning of the oil and gas projects’.

9. Why is Uganda struggling to attract investors to its refinery project?

Museveni wants a refinery, but he is failing to get investors. For more than a decade, he has been courting investors for a 60,000 barrels-per-day refinery, which would supply oil to local and regional markets.

CNOOC and TotalEnergies did not buy Museveni’s idea. He then he tried to sell it to East African Community leaders, offering them the chance to be shareholders in the project, but only Tanzania accepted.

Other global companies have been reluctant to commit funds for the project, saying it was awarded to a consortium of investors in 2018 but failed to take shape. In 2018, Uganda signed a framework agreement with Albertine Graben Refinery Consortium (AGRC), but the deal expired on 30 June 2023 without the partners having reached a final investment decision.

Following the agreement’s expiry, the Ugandan government said it is open to new bids from “public sector capital providers” for the refinery.

Museveni hosted the Iranian president, Sayyid Ebrahim Rasiolsadati, in Kampala in July and asked for bilateral cooperation in setting up an oil refinery. The Ugandan leader had made the same request in 2010 to then Iranian President Mahmoud Ahmadinejad when he visited the country, but it did not bear fruit.

10. How will the oil money be used?

The Ugandan government estimates it will earn $69.7bn from the oil project’s lifespan. It has promised that revenue will be invested in infrastructure that will transform the country’s critical sectors – from education to health, roads and energy, among others.

However, the government’s secrecy with documents related to oil has raised suspicion that the opacity hinders scrutiny of the sector’s performance and how oil revenue will be spent.

Despite having clear laws stipulating that oil revenue must be invested in infrastructure projects, the government has not respected these laws. In past years, the government has withdrawn money from petroleum accounts to fund recurrent expenditures from the national budget.

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