Omar Elmawi, the coordinator of the StopEACOP-campaign, spoke to Heinrich-Boell-Foundation's Adrian Amann on why the EACOP is a bad project for Uganda and Tanzania. Elmawi is a lawyer who advocates for climate justice and is renowned for the deCOALonize-campaign in Lamu County and champions for more green and sustainable energy. He lives and works in Nairobi, Kenya.
Why should people care about the East African Crude Oil Pipeline (EACOP)?
It will be the world's longest heated crude oil pipeline. Once completed, it will measure approximately 1,445 km from Hoima, Uganda, to Tanga, Tanzania.
The pipeline will transport about 216,000 barrels of oil per day and go to international markets by ocean tankers.
There are concerns that EACOP together with Tilenga and Kingfisher oil fields will displace over 100,000 people. It will pass through more than 200 rivers, while a third of the channel will be located along the Lake Victoria Basin.
The benefits that come from this project are insignificant. The two governments of Uganda and Tanzania will own 30% of the shares, while Total Energy, a French-based multinational company, and China National Offshore Oil Company will own 70%.
Various climate-related concerns have been raised. The oil obtained from this project will cause about 34 million tons of carbon emissions annually. This project brings not just the two countries but even Africa quite far back in terms of some of the climate commitments we have made as countries. Additionally, the project's repercussion on the economy supersedes the benefits that its supporters are fronting making it economically reckless.
You have had tremendous success with the deCOALonize campaign, including preventing the construction of a coal-fired power plant on Kenya's coast in Lamu. Most people regard coal as an energy source of the past. However, oil remains a part of our daily lives; for example, most cars still run on gasoline. So, why should Uganda not extract oil?
I am alive to the fact that more than 600 million Africans are energy poor, particularly lacking electricity. I also know that Africa is responsible for less than 4% of the historical emissions in the world and only contributes less than 1% each year. We are a relatively clean continent in terms of fossil fuel use. But, increasingly, whenever African countries discover these resources, they rush to exploit then in the belief that they will benefit from these resources and generate foreign revenue. However, history has shown that extracting fossil fuels in most African countries, particularly oil, does not make a country rich. In fact, it has impoverished them.
There are numerous examples of how fossil fuels have contributed to the impoverishment of African countries such as Nigeria. Nigeria is Africa's largest oil-producing country. However, this has not necessarily contributed to increased revenue or raised living standards. In Nigeria, over 70 million people live in extreme poverty, representing 33 per cent of the country's population – the highest in Africa.
Extracting oil also affects other parts of the economy. Tourism is Uganda's largest foreign earner. Many tourist attractions are located within the corridor that this pipeline is set to traverse. When it comes to agriculture, Uganda has the potential to feed more than 200 million people. At the same time, Africa pays a significant amount of money to import food for consumption.
While extracting this oil for foreign exchange, we are losing more on other industries that benefit the economy.
It is also clear that the economic agreement the two governments of Uganda and Tanzania signed with Total Energy and China National Offshore Oil Company will benefit those two companies much more than it benefits the two countries.
In what ways? One, there will be what they call a tax holiday for ten years. Therefore, for ten years, they will not be paying any corporate tax, which is supposed to be 30% of the revenues or profits coming from the crude oil sale. In addition, this means that these multinationals can extract as much as possible for ten years without paying any corporate tax. Therefore, they could ensure that they extract everything within ten years and close shop or move on to other prospects elsewhere.
They are also not paying enough of the withholding tax, which is supposed to be 15%. In this case, they have only agreed to pay 5%. Again, the two African countries are not benefiting from this agreement.
It is true that, of late, the price of Oil has gone up. However, they are exporting, most if not all, of the Ugandan oil to international markets. This means the local communities will not benefit from their natural resources. It looks more and more like corporate colonialism where Africa is used in the extraction of resources and losing the opportunity to transition to greener options like renewable energy.
Africa has an alternative renewable energy potential. As a continent we can contribute up to 40% of the current global estimations of renewable energy potential in the whole world. The two companies should be looking at investing in this area; less than 4% of the fossil fuel investments that are coming to Africa are going to renewable energy. These companies look at how they can maximize their profits with little to no thoughts if it affects these two countries. To them we are just collateral damage.
Therefore, who is driving the EACOP project, and who will benefit from it?
The ones who will benefit are the two companies that are involved. They are China National Offshore Oil and Total Energy, because Total has 62% pipeline ownership. In addition, we have not spoken about the two oil fields that will be used to extract this oil through the pipeline. One is called the Tilenga Oil Field, and the other is the Kingfisher Oil Fields. Total Energy and China National Offshore Oil have majority ownership of them. Therefore, this means that all these resources are in these companies hands, and will therefore benefit the most at the expense of the 105 citizens of Uganda and Tanzania.
Hundreds of thousands of people will be displaced; more than 40 million people might have to worry about where they will get their freshwater because they depend on Lake Victoria and Lake Albert. Some fishermen rely on Lake Albert for their livelihood. Agriculture is the backbone economy of Uganda. Seven out of ten people in Uganda work within the agricultural sector. So, what happens if there is an oil spill around this area from either the pipeline or the oil field activities?
Who is supporting this project besides those two companies?
This project is an expensive venture. To build the pipeline, they need at least $5 billion. If we include the oil fields, they will need at least $20 billion to be able to extract the first barrel of oil. That is why those two companies will need financing from banks and risk underwriting from insurance companies.
It is not public information which banks have been approached by Total. Therefore, what we have done as a campaign is we sat down, and we did an inventory of all banks that have historically supported Total or big fossil fuels projects. We made a list of about 30 banks in different parts of the world. In addition, we have sent letters, sent emails, done different ways of advocacy, and tried to convince them to withdraw, at least make a public commitment that they will not be involved in the project. So far, we have confirmed with 22 banks that they will not be involved in the project financing.
It is clear that more financial institutions and insurers are looking at EACOP as a potentially problematic project and that it is not worth investing in or being involved.
Most western countries have mined fossil resources in the past and have become wealthy from it. Furthermore, industrialized countries are responsible for most of the global emissions. Don't Uganda and Tanzania have the right to do the same?
If extracting these resources would benefit the country, it might have been a different story.
They could have argued about selling oil to transition from fossil fuels to renewable energies. However, when we extract the oil like this, all the benefits will go to Total and CNOOC. Uganda and Tanzania will receive loose change from this project, yet they will be required to pay for the costs and damages incurred due to the project. Extracting these resources is not in Uganda or Tanzania's best interests based on a cost-benefit analysis. Forget about the impacts on the environment and livelihoods; even if you only look at the economics, this project does not make any sense, unless you are Total and CNOOC.
Secondly, we are not saying they should not be developing. Our argument is that there is an alternative path East African countries could take that is not expensive and will benefit them more. We know that renewable energies employ more people for every dollar invested than fossil fuels. Renewable energies has fewer environmental impacts and is clean, as a result, will not compromise people's health, natural resources and livelihoods.
This means that by taking this different path of renewable energy instead of fossil fuels we will be benefiting more economically as a continent. However, we can also argue that the West extracted fossil fuels for a long time and benefited from it. In addition, it's part of the reason we have such a problem today because they took the benefits and then we all shared the consequences. Because of this historical injustice, the historical polluters must pay climate reparations to cover for loss and damage. They must make amends because they benefited off the backs of all these people who are currently suffering. Africa has contributed the least to carbon emissions, but they are the most affected by the impact we are discussing.
As a result, these reparations should fund an alternative development path that is greener, safer and does not affect as many people.
You can find more information about the campaign against the East African Crude Oil Pipeline at https://www.stopeacop.net/
This interview was conducted by Adrian Amann of hbs