Govt approves EACOP construction licence

 Mr Ramathan Ggoobi (2nd right), the permanent secretary in the Finance ministry, stands near oil drilling conductor pipes in the Kingfisher oilfields during a tour of the oil facilities in the Albertine Graben in April 2022. PHOTO/FILE

What you need to know:

  • The development spells bad news for environment activists who have opposed the project. 

Cabinet yesterday approved the awarding of the construction licence for the proposed East African Crude Oil Pipeline (EACOP), subject to conditions including securing all necessary consents and permits.

Other conditions are, the EACOP Company shall establish the main control for monitoring the 1,143km duct from Hoima in mid-western Uganda to Chongleani terminal at Tanzania’s Indian Ocean Tanga port, and consulting and seeking approval from authorities for any deviation from the current pipeline route, among others.

The $4b (Shs13trillion) pipeline, which will transport Uganda’s waxy crude oil to Tanga en route to the international market, traverses 27 sub-counties, three town councils and 171 villages in 10 districts of Hoima, Kikuube, Kakumiro, Kyankwanzi, Mubende, Gomba, Sembabule, Lwengo, Rakai and Kyotera.

The Acting Director of the Petroleum Directorate, Honey Malinga told Monitor last evening the attendant conditions “are imperative to guide” the project construction process.”

“The conditions are for addressing those areas of doubt, so you don’t want anyone to say I didn’t know or I wasn’t told,” Mr Malinga said.

The EACOP Company executives submitted the applications for construction licences simultaneously in Uganda and Tanzania in early July last year. The application for the licence in Uganda was submitted to the Petroleum Department, the policy arm of the ministry of Energy. 

The Tanzanian construction licence was also approved and is due for issuance in the coming days
The review of the application was initially supposed to take 180 days but the process was dragged by several bureaucratic headwinds including the EACOP Company having to first pay application fees.

The application for the licence is a requirement under Midstream (pipeline, refinery) legislations including the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, 2013, and the Petroleum (Exploration, Development and Production) Act, 2013.

Energy Minister, Ms Ruth Nankabirwa, who is currently accompanying President Museveni in Abu Dhabi, will headline the licence issuance in the coming weeks.

The issuance of the construction licences brings the development of the multi-billion-dollar project one step closer and lands a slap in the faces of more than a dozen local and international NGOs that in recent months mounted a blistering campaign to pressure financial institutions around the world to walk away from the project.

Unbothered financiers
After swaying the majority of the European Union MPs last September to pressure French TotalEnergies, the lead on the project, to delay the project for at least one year, NGOs had further hoped to rally world governments at the COP27 summit held in Egypt in November to come out strong on oil projects, including the EACOP.

However, the summit did not stop ongoing and planned oil projects. Rather, several countries underlined the need for energy security to avert any future disruptions suffered in the aftermath of Russia’s invasion of Ukraine.

Meanwhile, the EACOP company executives have continued to keep the cards close to the chest about the project financiers. Acquisition of the project right of way, including compensating affected persons, is also continuing on both sides of the border.

Compensation continues
There are 3, 648 project-affected persons in Uganda, of which only 206 are physically affected while 179 opted for their houses to be rebuilt for them. Also, some 2, 866 project-affected persons have signed compensation agreements, of which 2, 468 have so far received their cash compensations for either land or crops.

In Tanzania, there are 9, 510 project-affected persons, of which 96 percent or 9,111 persons have signed compensation agreements out of which 8,672 persons have received their cash compensations. The Tanzania section runs for 1,147km through 25 districts and eight regions.

The EACOP Company executives remain bullish that project construction will commence later this year, other factors kept constant.
 China Petroleum Pipeline Engineering (CPPP) will lead the construction works for the project development coordinated by Australia’s WorleyParsons Ltd which was awarded the Engineering, Procurement, and Construction Management (EPCM) tender.

French TotalEnergies holds a 62 percent stake in the project while Uganda and Tanzania each hold 15 percent, and Chinese oil company, CNOOC, has eight percent.

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