It’s still unwise to fund the East Africa Crude Oil Pipeline: risks and impacts keep mounting
(August 9, 2021) - Today members of the #StopEACOP Alliance published an updated finance risk briefing which documents the increased risks and impacts from the East Africa Crude Oil Pipeline (EACOP).
The document details significant human rights, biodiversity, and climate impacts, stranded asset risks, and the failure to disclose key documents by the project proponent, TotalEnergies, and the governments of Uganda and Tanzania. These impacts will be felt throughout Uganda and Tanzania.
TotalEnergies is still moving full steam ahead and has already signed host agreements with the governments of Uganda and Tanzania.
Both the EACOP and associated oil fields face widespread resistance locally in Uganda and Tanzania and globally, with over 1 million people signing a global petition against the projects.
Constructing the EACOP from Lake Albert’s shores in Uganda 1,445 km away to Port Tanga in Tanzania requires $5 billion ($2 billion as equity from the project sponsors, TotalEnergies, CNOOC Ltd and the Ugandan and Tanzanian national oil companies, and $3 billion via loans). The $3 billion loan has not yet been secured, as the list of financiers distancing themselves from the project has been steadily growing.
The EACOP needs more than 5,300 hectares of land, which will affect 14,000 households that will need to be resettled. Additionally, over 10,000 other households will be economically displaced and will lose land essential to their livelihoods.
At least seven commercial banks - ANZ, Barclays, BNP Paribas, Crédit Agricole, Credit Suisse, Société Générale and Unicredit - have ruled out joining the project finance loan since an open letter signed by 263 organisations from 49 countries called on banks to refuse to finance the EACOP. News that French banks would not finance the project was welcomed by the French Minister of the Ecological Transition, Barbara Pompili.
“Oil is not the ‘black gold’ as we are led to believe, and the position of Ugandans who have been affected by EACOP is simple: TotalEnergies and those considering financing the pipeline should know that it is having and will continue to have severely negative effects. It is, therefore, best for financial institutions to desist from funding the pipeline which will not only distort ecosensitive indigenous ways of living, but will also worsen climate change, whose grave impacts are already being exponentially felt in Uganda”, Diana Nabiruma, senior program and communications officer at Africa Institute for Energy Governance (AFIEGO) stated.
The project has also been denied support from insurers and export credit agencies. In July, AXA made clear that it would not support the EACOP, stating: “The underlying project is not compatible with our climate commitments.” The UK export credit agency, UK Export Finance (UKEF), has also turned down an application for finance, following a UK government decision to cease finance for fossil fuel projects overseas.
Omar Elmawi, the coordinator of the Stop EACOP campaign, commented, “moving forward with this project will not only be displacing communities and endangering wildlife, but will also be tipping the world closer to full-blown climate catastrophe. The pipeline makes no environmental sense, and proceeding with it will be economically reckless and ill-advised. The project can only culminate as a stranded asset that the people of Uganda and Tanzania will be left with.”
The new briefing by BankTrack and endorsed by the Africa Institute for Energy Governance (AFIEGO), Both ENDS, Inclusive Development International and Just Share identifies the following new developments which prospective financiers must heed:
New reports by project-affected people in Uganda of intimidation from security agents, as communities continue to await the compensation they have been promised and face restrictions on the use of their land;
A failure by the host countries to adhere to their transparency commitments, as members of the Extractive Industries Transparency Initiative (EITI);
New arrests in May of a Ugandan human rights defender and an Italian journalist, while they documented the abuses faced by project-affected communities;
International opposition is growing, with protests in front of banks and Total gas stations in countries around the world, and globally-known climate justice advocates including Greta Thunberg and Vanessa Nakate voicing opposition to the project;
A new court case filed at the East African Court of Justice (EACJ) in November 2020, aiming to nullify the agreements for the EACOP’s construction; and
The clear finding from the International Energy Agency (IEA) that there is “no need for investment in new fossil fuel supply” under its Net Zero by 2050 roadmap.
Ryan Brightwell, Human Rights Campaign Coordinator at BankTrack, commented: “Total may have renamed itself TotalEnergies, but in continuing with its oil projects in East Africa, it demonstrates that it remains committed to new fossil fuels and has zero interest in meeting 1.5 degree-aligned climate targets. Total needs to heed the message of the banks that have concluded that the EACOP project is too risky to touch, and reconsider. If this rebrand reflected a genuine change of approach, Total should be working with Uganda and Tanzania on forging a new development path based on renewables, rather than turning a National Park into an oil field and locking the country into building the stranded assets of the near future.”
Charity Migwi, Regional Campaigner at 350Africa.org, stated: “Climate impacts are worsening faster than expected, impacting the lives and livelihoods of the most vulnerable. By continuing with the EACOP project, TotalEnergies is essentially weighing the lives of Ugandans and Tanzanians against profit, despite the numerous risks that abound. The EACOP project will rob humanity of a generation’s worth of time to reverse climate change.”
Coleen Scott, Legal and Policy Associate at Inclusive Development International, stated: “The updated risk briefing should raise alarm bells for any bank or insurer still considering support for EACOP. Impacts on local communities have intensified, reprisals against human rights defenders have escalated, and opposition to the project has continued to grow--all against the backdrop of a worsening climate crisis. With the recent launch of the Net Zero Insurance Alliance, the insurance industry signaled its intention to support climate solutions. Its members must act on those commitments by declining support for EACOP, and underwriting clean energy alternatives instead.”
Read and Download the Financial Risk Update Here
About #StopEACOP
#StopEACOP is a global campaign against the construction of the East African Crude Oil pipeline (EACOP), a proposed 1,445-kilometer heated pipeline that will transport oil from Hoima, Uganda, to the port of Tanga in Tanzania. The campaign is led by an alliance of local groups and communities, and African and global organizations. Over 260 organizations have endorsed and are working towards realizing the campaign objectives through public mobilizations, legal actions, research, shareholder activism, and media advocacy.
Website: https://www.stopeacop.net/
Facebook: @StopEACOP
Twitter: @stopEACOP
For media inquiries, please contact:
Omar Elmawi, Coordinator of the StopEACOP Campaign, info@stopeacop.net