KAMPALA – A Kampala lawyer is seeking to stop the East African Crude Oil Pipeline (EACOP) project, citing violation of arrangements that provide for Ugandans to be involved in the procurement process.
In a suit filed before the High Court in Kampala, Mr. Andrew Oluka, through his attorneys Messers Muwema & Company Advocates, seeks to halt the project in “public interest” to cause a legal audit of the procurement processes and “make sure that local Ugandan companies and service providers are involved in the project as provided in the Constitution under provision of national content”.
The Uganda Petroleum Authority, is listed as defendant number one alongside oil giants Total E&P Uganda and CNOOC Uganda Ltd.
The East African Crude Oil Pipeline (EACOP) project is a 1,443 kilometre crude oil export pipeline system that will transport Uganda’s crude oil from Kabale – Hoima in Uganda to a maritime port facility on the Chongoleani Peninsula near Tanga in Tanzania.
But Mr. Oluka now wants court to issue an order directing Uganda Petroleum Authority to conduct a legal audit of all petroleum procurement activities to ensure compliance with the national content provisions of the law.
In the suit, the oil giants Total E&P Uganda and CNOOC Uganda Ltd are accused of contravening the laws that provide for national content in the petroleum sector.
Mr Oluka a lawyer specializing in the Oil and Gas Sector, is seeking for a court declaration that the ongoing procurement processes undertaken in respect of the East Africa Crude Oil Pipeline (EACOP) project, the Tilenga Upstream project and the Kingfisher Development Area project.
He is seeking for an order to restrain the respondents from continuing to conduct any further procurements in the petroleum sector which do not comply with the national content legal provisions.
Mr Oluka also wants court to declare that all business income derived from procurement under the projects is taxable in Uganda.
According to the public interest suit, Mr Oluka is seeking to “enforce and stop the infringement of the Constitutional and economic rights of Ugandans” who are entitled to be given priority in the provision of goods and services in the petroleum sector.
Mr Oluka contends that he is aggrieved by the accused party’s engagement in procurements under the EACOP worth $5 billion, the Tilenga Upstream ($5 billion) and Kingfisher Development Area Midstream project ($2.5 billion) for giving priority to foreign companies over Ugandan owned companies in contravention of the laws.
“The applicant (Oluka) is interested in ensuring that the implementation of the aforementioned procurements is done in accordance with the Constitution and the national content provisions of the relevant petroleum sector laws,” reads the complaint.
Mr Oluka points out in his suit that if allowed to continue, the EACOP shall occasion loss of public revenue and property unless restrained.
Total E&P Uganda and CNOOC Uganda Limited are international Oil companies who between 2016 and 2020 signed agreements with the Ugandan government to undertake the exploration, development and production of petroleum products in Uganda.
According to the Court documents, the agreement for the EACOP project, Total E&P Uganda has interest of 62 percent, Cnooc Uganda Limited (8 percent), government of Uganda and Tanzania has 15 percent interest each.
Mr Oluka contends that the Tilenga Upstream Project and Kingfisher Development Area Midstream Project are operated exclusively by Total E&P Uganda and CNOOC Uganda Limited respectively.
It is alleged that in carrying out its functions, the Petroleum Authority of Uganda is required to ensure that all licenses uphold laws, regulations, rules, contract terms and also ensure that fair practice is maintained.
“That nonetheless, the licensees who are Total E&P Uganda and CNOOC Uganda Limited have an obligation to uphold the laws and regulations governing the exploration, development and production of petroleum in Uganda,” reads the complaint.
According to the complaint, none of the expression of interest notices have included a qualification requirement necessitating a bidder to be a Ugandan company for purposes of participating in the procurement process.
He cites an example where McDermott and Sinopec which are foreign companies entered into joint venture pursuant to which they signed a contract with Total E&P for engineering, procurement and construction of a central processing facility at Buliisa without any legal restraint.
Mr Oluka further contends that even in cases where foreign firms have entered into joint venture with their Ugandan counterparts, they have sidestepped the joint ventures and bided alone.
This is a second case challenging the construction of Oil pipeline.
The construction of the oil pipeline from Uganda to Tanzania has since been challenged before the regional court for failing to conduct an environmental and social impact assessment.
In November last year, four non-governmental organisations moved to the East African Court of Justice to block the construction of the 1,445-kilometre pipeline which starts in Hoima in the Albertine Graben, western Uganda, and ends at Tanga port in Tanzania.
On April 11, President Yoweri Museveni of Uganda and his Tanzania counterpart President Samia Suluhu signed a deal for the $3.5 billion East African Crude Oil Pipeline (EACOP), now touted as a strategic win for Tanzania which will earn $12.7 off each barrel of oil transported through it.
The Centre for Food and Adequate Living Rights (CEFROHT) Ltd and the Africa Institute for Energy Governance (AFIEGO) both based in Kampala; Natural Justice-Kenya in Nairobi and the Center for Strategic Litigation based in Zanzibar, want the construction of the pipeline stopped until the matter is heard and determined.