Page 5 - AfrOil Week 45 2021

AfrOil COMMENTARY AfrOil

Nankabirwa was referring to previous reports Meanwhile, James Muhindo, the co-ordina-
in which Ugandan government officials were tor of the Civil Society Coalition on Oil and Gas
quoted as saying that they were still waiting (CSCOG), complained about the bill’s use of
for an FID on Kingfisher, which will be one of “non-interruption” clauses. Under these provi-
the two primary sources of throughput for the sions, he pointed out, Ugandan authorities may
216,000 barrel per day (bpd) EACOP. TotalEn- not order oil production to be diverted from
ergies (France) has already taken this step for EACOP to the refinery that is slated for con-
Tilenga, the other field that will use the pipeline struction near Lake Albert, even in the event of
to send its production to market, but CNOOC a national emergency.
has been slower to do so. These arrangements have the potential to
The energy minister was speaking just a few compromise the country’s security, he said, since
days after representatives of Uganda National the refinery will be turning out fuels for domes-
Oil Co. (UNOC) reported that the Chinese firm tic consumption only. They contradict several
had made another move that is likely to support provisions of Uganda’s Upstream Act, which
upstream development. According to UNOC, gives the government certain prerogatives with
as of late last week, CNOOC had met all of the respect to the acquisition of oil and petroleum
requirements governing its participation in the products “for other strategic reasons, such as
EACOP project. war,” he explained, according to a report from
Both of these news items are good signs for The Independent. Kampala may
Uganda’s oil industry. They signal that the Chi- be able to argue
nese company is ready to commit to the King- Kampala’s response
fisher project – and also ready to help build the Otaala responded to these critiques by saying that some of
pipeline that will give the Kingfisher and Tilenga that Parliament should review certain sections
fields access to world markets, which they need of the pipeline agreements in order to determine the proposed
to be developed economically. whether any of the controversial points could be
renegotiated. It’s not clear, though, whether any changes to the
NGO concerns of the revisions that the NGO representatives draft EACOP bill
But there is at least one more new development have suggested will actually be made.
that may affect the economics of the Kingfisher, On some points, Kampala may be able to are not needed
Tilenga and EACOP projects – namely NGO argue that the proposed changes are not needed.
criticism of draft legislation that the Ugan- Government officials may argue, for instance,
dan government drew up for the purpose of that they have already anticipated Mukunda’s
safeguarding its agreements with the pipeline concern about the location of EACOP’s head-
consortium. quarters by pointing to the section of the bill
Civil society groups’ reservations about the that provides for the consortium to establish a
deal came to light on November 3. On that date, holding company to build and operate the pipe-
the Ugandan Parliament’s Committee on Envi- line in the UK. According to previous reports,
ronment and Natural Resources invited repre- this entity will be treated as if it were based in
sentatives of multiple NGOs to comment on this Uganda for tax purposes, thereby ensuring that
year’s East African Crude Oil Pipeline (Special most of its payments are made to the Ugandan
Provisions) Bill. government.
One of the critics was Julius Mukunda, the It remains to be seen, though, whether the
executive director of the Civil Society Budget questions raised about tax breaks and conflict
Advocacy Group (CSBAG). He told chairman with the existing legal regime will gain any trac-
Emmanuel Otaala and the other members of tion. If they do, debate on the East African Crude
the committee that he saw several problems Oil Pipeline (Special Provisions) Bill may slow
with the draft legislation – for example, that the the pace of work on EACOP – and, by extension,
EACOP consortium’s 10-year exemption from on the Lake Albert oilfields, which need the pipe
corporate/income tax was too long and that in order to gain access to world markets.
the bill could not prevent the pipeline group Even so, CNOOC’s decision to move forward
from abusing its option to extend the term of its with development is a positive sign for the Ugan-
exemption. He also complained that the draft dan oil sector – and perhaps positive enough to
legislation could damage national interests, as it outweigh any concerns arising from NGO com-
did not ensure that EACOP’s headquarters were plaints about the draft legislation now being
in Uganda. debated in Uganda’s Parliament. ™

Pipeline construction site (Photo: EACOP)

Week 45 10•November•2021 www. NEWSBASE .com P5