By Ezaruku Draku Franklin

The battle to stop construction of East African Crude Oil Pipeline has gone to its financing, with 20 leading global financial institutions now stating publicly that they will not finance the project over environmental and human rights concerns.

The latest move has thrown a spanner into Uganda’s quest to join the oil production by 2025 as earlier on stated by different stakeholders including the government of Uganda and oil companies investing in the pipeline project.

The project is expected to cost up US $ 5 billion, with TotalEnergies providing between $2-3 billion which is expected to be borrowed while the rest of the funding is expected from other partners. Uganda owns 15 percent stakes in the pipeline project while the rest is owned by TotalEnergies and China National Offshore Oil Company CNOOC and government of Tanzania.

The latest five banks to public dissociate themselves from financing the project are Deutsche Bank, Citi, JPMorgan Chase, Wells Fargo and Morgan Stanley who have been joined by the insurer Beazley Group and the Italian export credit agency SACE.

These join ABSA Bank, First Rand, INVESTEC, Barclays Bank, United Overseas Bank, ANZ, BNP Paribas, Credit Suisse, RBC Royal Bank, SOCIETE GENERALE, Credit Agricole, HSBC, Mizuho, UniCredit, NEDBANK.

Meanwhile, three banks, Standard Bank of South Africa, Sumitomo Mitsui Bank (SMBC) from Japan and ICBC of China are the three key financial advisors of the EACOP project and have publicly vowed to support the project while 12 banks have not ruled out supporting the project.

They include Santander from Spain, NATIXIS, France, BBVA Spain, Oversea-Chinese Banking Corporation (OCBC), Singapore, Standard chartered, United Kingdom, China international capital company, Goldman Sachs United States, Bank of China, China Construction bank, and Agriculture bank of china, Mitsubishi UFJ Financial Group JAPAN, and Bank of America.

The 20 banks have extended financing to Total Energies and CNOOC to a tune of more than $30 billion in the last seven years. Their pull out from the project is likely to have a big impact on the development of the pipeline.

The EACOP is a more than 1,400 km long pipeline that runs alongside Lake Victoria basin, which is the continent’s largest freshwater reserve and the source of the Nile, between Uganda and Tanzania. Since its inception, environmentalists and climate change activists under coalition to Stop EACOP project have launched a barrage of campaigns to stop the project because of environmental and human rights concerns.

The financial risk briefing conducted by Bank Track, Africa Energy Governance Institute (AFIEGO) and other Civil Society Organisations indicate that a total of more than 5,300 hectares of land will be needed for construction and operation of the pipeline, which means that around 14,000 households will lose land.

Of these, roughly 200 households in Uganda and 330 households in Tanzania will have to be resettled, and approximately 3,200 to 3,500 households in Uganda and 9513 households in Tanzania will be economically displaced, which means they will lose land essential to their livelihoods.

Under the coalition to stop EACOP, the civil society actors say the pipeline that will transport 200,000 barrels of oil per day and generate up to 34 million tons of carbon emissions each year – seven times what Uganda emits each year and about 1/16th of France’s emissions is a real danger.

“The full value chain emission estimates over the EACOP’s 25-year lifetime are 377.6 million metric tonnes,” the group says.

The group says this will add onto the already worsening climate change situation with rising temperatures. According to them, the pipeline also impacts the human rights of over 100,000 people and puts in jeopardy wildlife, forests and water resources including more than 200 rivers, and Africa’s largest freshwater lake, Lake Victoria, which supports over 40 million people.

Back to the drawing board, the activists say the oil will be heated permanently to 50°C to keep it fluid and transport it to the port of Tanga, in Tanzania, and into international shipping tankers. This, they say will add onto the already high temperatures that is threatening the world.

With the latest number of the banks that have pulled out, the total number of banks that say they will not finance the project has risen to 20, with eight insurers also saying they will not be part of the project. Available documents indicate that the list of banks rejecting the project includes seven of Total’s ten largest lenders.

“If TotalEnergies was planning to ask for public finance on the pipeline, they will also have to look elsewhere. This week the Italian Export Credit Agency (ECA) SACE turned down an application to support the project. ECAs from the UK and Germany have also ruled out support for EACOP, while French President Emmanuel Macron told activists last week that he would stop any remaining public finance to EACOP,” the activists say.

The news of the US banks’ rejection of the EACOP project loan came as the Financial Times revealed, together with the Bureau of Investigative Journalism, Marsh McLennan is arranging the insurance coverage for EACOP, despite protests from more than 100 of its staff citing the “disastrous consequences” for the climate and the company’s reputation.

The CSOs argue that despite all these impacts, even the economic benefits of the pipeline to Uganda and Tanzania are minimal at best since TotalEnergies and China National Offshore Oil Company together own 70% of the shares while Uganda and Tanzania keep 15% each.

“This makes them minority shareholders of a resource that comes from their region,” the group argued.

“Perhaps even more troubling is the fact that the two countries have passed laws that, among other things, give the project developers a ten-year corporate tax holiday (on a tax which is normally set at 30% of the profits made) and a withholding tax of 5% (as opposed to 15% as  required by law). The project developers also are exempted from any VAT deductions of materials and equipment that will be imported for the project,” the statement from the coalition added.

Omar Elmawi, the Coordinator of the Stop EACOP Coalition said the Total and allies were in a hurry to announce their final investment decision in early February this year. He said since then the list of banks and insurers staying away from EACOP has been growing.

“It is no secret that this project will impact people, nature and the climate and it is becoming clear to all those involved, except for the project developers who are fueled by greed, that it is in everyone’s best interest to put a stop to this impending disaster and corporate colonialism,” he said.

Ryan Brightwell, Human Rights Campaign Lead at BankTrack said the global banking sector’s wholesale rejection of Total’s dangerous plans for the East African Crude Oil Pipeline is becoming clearer by the day. He said the news from the Financial Times that Citi and JPMorgan Chase won’t join the project loan for this pipeline is particularly significant, as they number among Total’s five biggest lenders.

“Now all five have declared themselves out of the running, and the total number of banks to have made clear they won’t support EACOP stands at 20. The problem now is that many of the same banks that have said “no” to supporting EACOP directly are keeping on providing general-purpose loans to Total, which leaves them linked to the damages and exposed to the risks in any case. It’s time for banks to say “no” to all further finance for Total unless and until it shelves plans for the EACOP and all other new fossil fuel projects and gets serious about 1.5 degrees,” he said.

He also said the project risks poisoning the water resources and wetlands of Uganda and Tanzania, including the Lake Victoria Basin, on which more than 40 million people depend for drinking water, food production and their livelihoods.

“This will violate a multitude of human rights: the right to property, the right to an adequate standard of living, the right to food, the right to education, the right to health, the right to adequate housing, the right to life and safety, the right to freedom of expression, assembly and association, and the right to free, prior and informed consent. There are threats, harassment, intimidation, attacks, arrests and imprisonment of environmental, human rights and journalistic defenders,” he said.

The East African Crude Oil Pipeline Company however disputed the claims by the CSOs, noting that contrary to what they are spreading, only 13,161 households are affected.

Ms Stella Amony, the EACOP communications lead told this website that only very minimal numbers have been affected by the project. She said those affected are being either relocated or government is compensating them.

“There are 13,161 affected households (3648 in Uganda and 9513 in Tanzania) along the route, of whom some 4% are ‘physically displaced’. This means that the household’s main dwelling is impacted. In such cases the household is offered a choice between a replacement houses built by the project or cash compensation. The remaining 96% of households are ‘economically impacted’ meaning that they will be compensated for land, crops, trees, and structures on the pipeline route,” she said.

She also said in most cases the land being taken by project is only a portion of the affected household’s total land, due to the linear nature of the acquisition (a 30m corridor).

“Most households whether economically impacted or physically displaced will have access to livelihood programs in addition to their full replacement cost compensation and eligible households will also receive transitional food support,” she said.

Amony said while oil spills may be inevitable, the EACOP was designed, pressure tested and monitored along its entire length using a fiber optic cable and that even in the unlikely event of a leak, the design is such that the inventory lost is minimized and emergency response plans will be in place.

“The pipe does not pose a threat to the livelihoods of more than 40 million people. The pipeline route was selected over several years after comprehensive feasibility studies directed at avoiding environmentally and socially sensitive areas such as protected areas and areas of high population density,” she said.

“The Front-End Engineering Design (FEED) and Environmental and Social Impact Assessment (ESIA) ensure that temporary and permanent facilities are carefully located. The pipeline and facilities will be constructed and operated to reduce potential adverse environmental and social impacts and maximize benefits,” she added.

She said the project continues to develop a complete understanding of the diverse environment and social elements along the proposed pipeline route and that it “has worked with teams of environmental and social experts to develop a robust and comprehensive Environmental and Social Impact Assessment (ESIA). These studies are used to inform the design, construction, and operation of the pipeline.”

Vatican voice concern

The environmental activists this year took their campaign to the Holy Sea, attracting an unlikely audience in Pope Francis II. Led by Vanessa Nakate, the team also had Diana Nabiruma of AFIEGO, Hilda Flavia Nakabuye, founder of Uganda’s Fridays for Future movement; and Maxwell Atuhura of the Tasha Research Institute Africa Limited in Uganda.

After their meeting, the Vatican released a statement voicing its concerns over the project saying the project has the potential to cause harm to millions of Ugandans and Tanzanians.

The pipeline is being built as scientists are ratcheting up the decibel levels on the climate crisis alarm, and after the International Energy Agency has called for no new fossil-fuel projects if the world is to reach net-zero emissions by 2050. The EACOP is expected to generate up to 34 million tons of carbon emissions each year.

“The Catholic Church stands with the people of Uganda and Tanzania in denouncing the EACOP project and asking the two governments to look into investing in projects that are in line with preserving and caring for our common home, the poor, and the economy,” said Fr. Joshtrom Kureethadam, coordinator of the Ecology and Creation sector of the Dicastery for Promoting Integral Human Development.

“To the multinational institutions still supporting and promoting the use of coal, oil, and gas in emerging countries in Africa and everywhere, it’s high time that they divested these funds to the renewable sector. Renewable energy has the potential to drive big economies, create sustainable jobs, and bring down the huge electricity bills brought by the overreliance on fossil fuels.”

Nakate said the meeting with the Pope is important because activists, environmental defenders, and scientists for years have been reaching out to world leaders about the dangers the people and the planet are facing and asked them to take action, but haven’t seen any meaningful action.

“We continue to see continued investment in fossil fuels. It’s important to have direct dialogues with the Pope and other leaders to share our stories… and have a heart-to-heart conversation,” she said.

She said building the EACOP would make keeping global temperature increase to below 1.5 degrees Celsius this century “impossible.”

Nakate added that the world needs a just transition for all without leaving the vulnerable and less-privileged communities behind, the pledge for climate finance to the vulnerable communities to be delivered, and money for loss and damage should also be talked about and provided to the communities.

“We want people in Europe and around the world to know about the East Africa Crude Oil Pipeline. We want financial institutions and other big companies supporting [energy company] Total to withdraw their support. We want to see this project stopped, as well as any other new oil projects in Africa and around the world,” she said.

Fr. Kureethadam said Catholic Church teaching recognizes that the climate crisis is a grave moral issue threatening every living being in our common home.

“The climate emergency and ecological crisis harm humankind’s ability to protect human life, health, dignity, and security. The dual crises also gravely affect our ability to promote the common good and care for God’s creation,” he said.

He said Fossil fuels are the primary cause of the climate crisis, and their overuse goes against Pope Francis’ vision of integral ecology that he laid out in the encyclical Laudato si’. His Holiness told a group of leaders from major oil and natural gas companies in 2018: “Civilization requires energy, but energy use must not destroy civilization!”

Uganda gov’t sticks to guns

While activists have gone on offensive against the project, government has stuck to its guns and said the project will go on whether some banks pull out or not. Matia Kasaija, the finance minister said the 20 banks pulling out will not change anything. He said many more banks have approached the government to join the funding bandwagon and that all is set.

“These banks pulling out is not an issue. We have many more banks ready to finance this project and as I speak right now, a big bank has approached me with an offer of financing and we are going to sit down and discuss,” He said.

“Tilenga and EACOP are a concrete example of the application of the Company’s ambition and commitments to biodiversity. Significant resources have been mobilized to implement them in an exemplary way. For four years, the affiliate has been in close contact with the local people and has been striving to minimize the projects’ impact on the local community. We are proud to be a part of these major developments for the Company that promise to transform their host countries,” Terraz said.

TotalEnergies speaks out

While TotalEnergies did not directly respond to our request for information, the company, several days after we made the request, issued a public statement, noting that the company is acting transparently while dealing with EACOP project.

Nicolas Terraz, the Vice President TotalEnergies E&P Africa said the projects for the development of the oil and gas resources of the Lake Albert region and the cross-border pipeline are situated in a sensitive social and environmental context that requires special measures for the environment and the rights of the local communities.

“The Tilenga and EACOP projects are situated in a sensitive social and environmental context and require land acquisition programs with close attention to the rights of the affected communities. Environmental and social impact assessments (ESIAs) have been carried out in compliance with the exacting standards of the International Finance Corporation (IFC). Third-party reviews have also been conducted to ensure that the projects are compliant with the best social and environmental practices,” he said.

He added: “As a responsible operator, TotalEnergies recognizes the projects’ environmental and social issues, and takes them into consideration.”

He said the completion of the Tilenga and EACOP projects will require the implementation of a land acquisition program covering some 6,400 hectares and that for Tilenga and EACOP, this program means relocating 723 primary residences, and will affect a total of 18,800 stakeholders, landowners and land users.

“Carried out in compliance with IFC performance standards, this program will begin with a complete survey of the land and crops and monetary compensation and/or compensation in kind. Each family whose primary residence is being relocated may choose between a new home and monetary compensation. An accessible, transparent and fair complaints-handling system will be running throughout the process,” Mr Terraz said.

He said right from the design phase of these projects, special attention has been paid to information, consultation and consensus-building with all stakeholders and that over 70,000 people were consulted for the ESIAs.

“As in all the Company’s operations, TotalEnergies attaches the utmost importance to compliance with human rights in the implementation of these projects. Everybody has the right to express themselves. TotalEnergies does not use or tolerate the use by others of aggression or physical or legal threats against people who are exercising their right to freedom of expression or their right to peaceful assembly or protest,” he said.

The company said the projects are located in a sensitive natural environment, especially in terms of biodiversity and strict measures have been taken to avoid, mitigate and offset their impact.

According to the company, the route of the EACOP pipeline has been designed to minimize its environmental impact, with careful attention paid to watercourses, and horizontal drilling will be used for the most sensitive case.

“For these two projects, and in line with its biodiversity commitments, TotalEnergies will also implement action plans that generate a positive net impact on biodiversity. These plans will be defined in close collaboration with the authorities and stakeholders responsible for nature conservation in Uganda and Tanzania,” the company says.