Denis Kakembo, the Managing Partner and leader of Corporate and Tax Practice at Cristal Advocates, has revealed that the continuous uninformed statements uttered by a section of Civil Society Organizations (CSOs) are frustrating the financing of the East African Crude Oil Pipeline (EACOP) project.
Cristal Advocates is a corporate and commercial law firm offering full scale legal services with an emphasis on tax, energy, infrastructure and business support.
On Sunday April 11, the Ugandan government led by President Yoweri Kaguta Museveni, his Tanzanian counterpart Samia Suluhu and two oil companies; Total E&P Uganda Limited (TEPU) and China National Offshore Oil Company (CNOOC) signed four different agreements to pave way for the construction of the USD 3.5bn 1,440 kilometer EACOP from Hoima (Uganda) to Tanga Tanzania.
The agreements include; Host Government Agreement, Intergovernmental Agreement, Shareholders’ Agreement, Tariffs and Transport Agreement, Project Framework Agreement and Several Financing Agreements.
TEPU is the majority shareholder in the deal with 72% followed by Uganda with 15%, CNOOC with 8% while Tanzania have 5%. The project is however expected to be funded with borrowing from different banks, which have opted out of the deal.
In a March 18th press release issueed by Inclusive Development International, banks provided statements that they will not support the construction of EACOP, after an open letter endorsed by 263 organizations from around the world was sent to 25 banks considered most likely to be approached for financing.
Speaking to journalists at the sidelines of the ACME media training on oil and gas in Kampala on Monday, Kakembo wondered why CSOs have chosen to “just make noise without reading and understanding what’s on ground.”
“The perception people have towards oil and gas sector is old fashioned. Its true in the past oil companies didn’t behave well and this was in so many countries where they operated and people did not benefit so there is that historical bias which is still being held by people to date,” he said.
Adding: “The oil and gas industry has tremendously transformed over the period of time there is a lot of honor for an international law level perspective to ensure that people benefit and protect the environment and there are a lot of instruments that can be used to achieve this but these instruments can only be used when the CSOs understand and appreciate what they are.”
CSOs, he said, sometimes approach these issues on a perspective of an activist mind, “but not from a mindset of an informed person on what is taking place and yet if they understand fully what is taking place, they can serve their people in terms of articulating their concerns.”
“I would urge CSOs to take time, dig in and take more information which is readily available to boost and build their capacities.”
“Whenever there is an economic activity or project taking place, you would expect that people will be affected but there are other ways of mitigating that like; is the process transparent, are people being compensated, these are not very difficult issues, which can be addressed,” he said.
The said EACOP project is expected to kick off in six months’ time which Kakembo noted will be the final kickoff of each and everything including the declaration of Final Investment Decision (FID) by oil companies.
