Development Digest: The East African Crude Oil Pipeline (EACOP) Project
Amidst a global pandemic, historically low oil prices and a shift towards cleaner energy systems, a $3.5 billion oil pipeline project in East Africa seems like a bizarre investment. But, oil is still a hot commodity and the petrochemicals industry needs to replenish exhausted reserves.⠀
EACOP is a proposed 1,445-kilometer cross-border pipeline from Hoima, Uganda to the port of Tanga in Tanzania for export to international markets.The project costs an estimated $3.5 billion in capital expenditure and $91 million in operational expenditure per annum. Japan’s Sumitomo Mitsui Bank and Stanbic Bank Uganda are responsible for raising $2.5bn in capital for the project.⠀⠀
The pipeline will carry 216,000 barrels of crude oil daily and will require heating to 50 degrees Celsius due to the waxy nature of Uganda’s crude oil.⠀
EACOP is expected to create 4,700 temporary and 300 permanent jobs, spur business activity, increase FDI for both countries and strengthen the oil and gas value chain.⠀
But, what is good for the economy is not always great for the environment ⠀⠀
The project has been highly contested by local communities, NGOs and civil society organisations because of the concomitant negative environmental impact.⠀⠀
The project will displace thousands of small farmers, put wildlife habitat at risk and compromise the biodiversity of water bodies such as Lake Victoria and the Kagera River. There is also the threat of pollution resulting from oil spills and leakages.
While EACOP presents economic benefits for both countries, there are attendant costs to lives and livelihoods that we cannot disregard. In the absence of proper safeguards, the harmful effect on the economy, society and nature could become a distinctive feature of the EACOP project.⠀⠀
If we have learned anything from activities in the petroleum industry, it is that oil pipelines have disproportionate impacts on poor and minority communities and can lead to serious human rights violations. Nigeria’s Niger Delta region is a sobering example.
Thanks for reading,