Non Compensation, Local Content Take Centre Stage As Debates On ECOP Bill Gain Momentum

Non Compensation, Local Content Take Centre Stage As Debates On ECOP Bill Gain Momentum

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By Spy Uganda

Kampala: Members of Parliament have raised concern about the failure to compensate Ugandans affected by the construction of the US$ 5 Billion East African crude Oil Pipeline despite the project kicking off.

On Tuesday, 8 December 2021, the Environment and Natural Resources Committee of Parliament chaired by Dr Emmanuel Otaala, the West Budama South MP, presented the East African Crude Oil Pipeline (ECOP) Special provisions Bill 2021.

Among other things, the bill seeks to enable certain provisions of the Inter-governmental Agreement (lGA) signed between the Republic of Uganda and the United Republic of Tanzania and the Host Government Agreement (HGA) signed between the Government of Uganda and the East African Crude Oil Pipeline Company Ltd to facilitate the development and implementation of the East African Crude Oil Pipeline (EACOP) Project in Uganda.

It is also intended to facilitate the development and implementation of the East African Crude Oil pipeline in Uganda under the Intergovernmental Agreement and the Host Government Agreement.

However, as the committee presented the bill, it emerged that the project affected persons who are supposed to be compensated to a tune of Shs 45 billion have not been paid. The committee also raised concerns about local content.

“The Committee noted with concern that the land acquisitions for the EACOP project has commenced but in breach of the principles of prior, prompt and adequate compensation,” Otaala stated in his report.

The committee was however quick to say that the compensation of the project affected persons is dependent upon the shareholders taking a final investment decision and making the required cash contributions.

“Final investment Decisions of the EACOP project will require the EACOP Bill to be enacted,” Otaala’s report reads.

The bill proposes that Ugandan entities intending to provide goods, works or services to the project company should be registered on the national supplier database maintained by the Petroleum Authority of Uganda. However, Clause 15(2) of the Bill further seeks to allow the project company to contract a company not registered on the national supplier database if the goods, works or services are not available in Uganda.

The committee rejected the proposal noting that non-Ugandan companies could use this window to dominate the sector and defeat the rationale for local content.

Commenting on the challenges project affected persons were facing, Hon. Christine Nakimwero, the District Woman MP Kibooga said the residents in the project area have been denied access to their land since 2018.

“The project affected persons have not yet been paid. They have been denied the opportunity to use their land. Currently, nobody is allowed to use their land for any activity exceeding three months,” Nakimwero explained.

Harriet Busingye, the Hoima District Woman Representative, said in Hoima and Buliisa the compensation was vague, adding that everyone is complaining about compensation.

Sidronius Opolot, the Minister of State for Energy, however said that the bill is in line with the Land Act and caters for compensation. He said the Act is simply for the transportation of oil from production to sale.

The East African Crude Oil Pipeline is a 1,445 km heated pipeline to be constructed between Uganda and Tanzania for the transportation of Uganda’s crude oil.

The pipeline will transport oil from the delivery point in Hoima District to the coastal port in Tanga District, Tanzania. The Uganda National Oil Company (UNOC) and the Tanzania Petroleum Development Corporation (TPDC) have 15% shareholding in the pipeline company each. CNOOC Uganda Limited has 8% shares and Total Energies, Uganda B.V. holds 62% shares in the company.

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