KAMPALA: Parliament on Thursday, December 9, 2021, approved the East African Crude Oil Pipeline (EACOP) Bill to pave way for the full implementation of the oil pipeline project in Uganda.
The passed EACOP Bill enabled UNOC (Uganda National Oil Company) to meet its financial obligation as a Joint Venture Partner (JVP) and create a harmonized law for the operationalization of the EACOP in Uganda and Tanzania.
The Bill was passed during the plenary chaired by the deputy speaker Anita Among and it will enable the implementation of the local content. It dedicated an entire section to dealing with issues of national content applicable to the EACOP project by making provision for Ugandan citizens and enterprises to optimally benefit from the project through prioritization, ring-fencing, and joint ventures, and free movement of labor across Uganda and Tanzania. It also puts Ugandans in good stead to participate by providing goods and services. Transportation, security, hotel accommodation and catering, and civil works are reserved for Ugandans.
Also in the Bill, environmental protection, one of the many criticisms of the EACOP was addressed. The Bill recognized the need for environmental restoration at the end of the pipeline activities by setting out a decommissioning regime to ensure this is done thoroughly as well as making provisions for how the funds required to decommission the pipeline will be kept.
Procedures on how a third party can access the EACOP were also addressed in the Bill. The section defined the tariff to be incurred by third parties who wish to use the EACOP, such as neighboring countries that might want to join. This also guarantees that the crude oil from any future discoveries can easily be commercialized, thereby giving an incentive for further exploration in the country.
The Bill also enables the government and the Uganda National Oil Company (UNOC) to pay the transportation fee (tariff) for their crude oil volumes using crude oil instead of cash. This guarantees that their crude oil delivered at the exit point of the EACOP in Tanga would be free from any encumbrances and gives the government and UNOC the freedom to obtain maximum benefit from the oil from that point on.
With the EACOP Bill now passed by Parliament, the 1,443-kilometre EACOP Bill awaits approval from President Museveni to spur the development phase and ensure alignment of the work schedule between the Upstream (Tilenga and Kingfisher projects) and Midstream (EACOP project) to spur Uganda’s oil and gas industry. This will, in turn, facilitate the achievement of the First Oil target of 2025.