The East African Crude Oil Pipeline is a buried pipeline system that will transport crude oil produced from the Tilenga and Kingfisher developments in Uganda’s Lake Albert area to world markets.
The pipeline starts in Kabaale – Hoima in Uganda and ends on the Chongoleani peninsula near Tanga on the Indian ocean coast in Tanzania.
The project is being jointly developed by TotalEnergies and the China National Offshore Oil Corporation (CNOOC), along with the state-owned Uganda National Oil Company.
The laws that currently exist specifically to regulate both upstream and downstream petroleum activities in Uganda are outdated, having been enacted at a time when large-scale exploration and production activities were not envisaged in Uganda. They include: 1985 Petroleum (Exploration and Production) Act, Chapter 150 laws of Uganda; 5th of December 1957, Petroleum Act Cap 149; Petroleum Supply Act of 2003.
These laws are accompanied by subsidiary regulations or statutory instruments, such as: Statutory Instrument No. 150—1, the Petroleum (Exploration and Production) (Conduct of Exploration Operations) Regulations; Statutory Instrument 149—1, the Petroleum (Spirit) (Licensing, Testing and Possession) Rules; Statutory Instrument 149—6, the Petroleum (Spirit) (Marking) (Approval of Marker and Prescription of Fees) Notice.
Oil and gas management cuts across policy areas of taxation and revenue management, government accountability, corporate regulation, environment, land security, etc., so it is important to recognise that there are other existing laws relevant to the overall framework for managing the new sector.
In addition to the Constitution itself, these include: Land Act, 1998; Access to Information Act, 2005; National Environment Act, chapter 153; Investment Code Act, chapter 92; Penal Code Act, chapter 120; Income Tax Act, 2002; Wildlife Act, chapter 200; National Forestry and Tree Planting Act, 2003; Public Health Act, chapter 281; Water Act, chapter 152; Public Procurement and Disposal of Assets Act.
Due to the vacuum created by the outdated laws governing Oil and Gas in Uganda. Theres was need for a new up to date legislation and according to the 2008 National Oil and Gas Policy the specific role of parliament in Uganda’s petroleum sector is:
To enact petroleum legislation;
To enact the proposed legislation for the management of petroleum revenues; and
To monitor performance in the petroleum sector through policy statements and annual budgets.
And hence upon this background, the full implementation of the oil pipeline project in Uganda was boosted by the passing into law of the East African Crude Oil Pipeline [EACOP] [Special Provisions] Bill, 2021. The bill, with 46 clauses seeks to facilitate the execution of Uganda’s obligations under the Intergovernmental Agreement and the Host Government Agreement.
It will also empower government and the Uganda National Oil Company to pay the transportation tariff in kind, ensure that the project obtains required authorizations in a timely manner as well as grant and protect land rights of the project including land acquisition.
Additionally, the law will define the local content regime applicable to the EACOP and ensure that Ugandan citizens and enterprises benefit from the project. It will also guarantee third party access to the pipeline and define the tariff to be paid.
Significant effort has been expended by both the Government and International Oil Companies to come up with a comprehensive and elaborate fiscal and taxation regime in the EACOP Bill. In light of the enduring past sector tax disputes both parties were keen to have unequivocal streamlined provisions in the law.
One of the latest efforts to hinder the EACOP project was a case filed by six French and Ugandan environmental and human rights groups seeking to halt construction of the 1,443km East African Crude Oil Pipeline (EACOP) from Uganda to Tanzania. The activists had accused French oil major TotalEnergies, the lead investor in the $5 billion EACOP, of doing little to protect the environment and people.
The suit was brought by two French and four Ugandan NGOs, which accused TotalEnergies of taking land from more than 100,000 people without adequate compensation.
They also said the company drilled wells in the biodiversity-rich Murchison Falls National Park on the shores of Lake Albert.
The court, however, dismissed the case and ruled that the case was not only inadmissible but also required in-depth analysis to ascertain if the accusations against the firm were justified, including an audit of ground operations.
The Paris court considered that the case was too complex to be dealt with under an emergency procedure. Consequently, it did not rule on the merits, conceding that the case must be examined in depth exceeding the powers of the judge of summary proceedings.
It should be understood that this judgment is devoid of any res judicata in the main proceedings, i.e the judge on the merits can always give a different judgment, which will prevail in which case.
Moreover, certain interpretations of the law on Duty of Vigilance seem at first sight challengeable. In particular, the court ruled the associations’ claims inadmissible for the following procedural reason: the grievances and claims formulated in the letter of formal notice (hereinafter MED, this is a compulsory preliminary letter before taking legal action on the basis of the duty of care law) differ too much from those raised in the last written and oral pleadings.
This meant that the document the plaintiffs submitted to the court were “substantially different” from those that were presented to TotalEnergies in a formal notice in 2019 when the case was initiated.
The plaintiffs, who can appeal against the decision, said they would speak to “the affected communities” about next steps.
TotalEnergies welcomed the ruling and stated that the verdict recognized the firm had “formally established a vigilance plan” with elements “sufficiently precise to not be regarded as cursory”.
However, on the brighter side, the East African Crude Oil Pipeline is touted as the project that will unlock East Africa’s future by taking Uganda’s oil to the rest of the world. The 5m USD investment of the EACOP construction will be the major source to increase direct foreign investment in both countries by 60 percent.
EACOP will increase opportunities for companies and service providers through provision of goods and services in the project that will increase profit margin to the companies as the project provides vast opportunities across different sector of economy.
Ugandans will benefit from the job opportunities from EACOP which will hire approximately 10,000 skilled workers, semi-skilled workers, and casual workers during the construction phase. Sixteen categories of goods and services such as transportation, security, hotel accommodation and catering, and civil works are reserved for Ugandans.
Casual workers will be employed from each district the pipeline passes hence developing the local capacity through technology transfer.
Improvement of Infrastructure through the construction of new access roads, bridge and also upgrading existing ones
Improving Gross Domestic Product (GDP) for both countries through taxes
Also, the EACOP project will attract more investors for the exploring oil and gas resources in the countries.
Towns along the pipeline’s path are likely to experience the local business boom as those working on the pipeline will stay, in the construction camps, local hotels, drink in local bars. And spend money on the entertainment.
In conclusion, it’s quite clear that Uganda is now focused and determined to ensuring its bright future is guaranteed by the positive economic benefits associated with the East African Crude Oil Pipeline. Several hindrances and efforts to curtail the project have all been withered.
Relevant legislations have been put in place and government policies and man power have all been directed to ensuring the successful implementation of the project for the benefit of Uganda and her people.
Nkesiga M Kamiisi