H.E. Uhuru Kenyatta

A look into the leaked SGR Agreement

“Transport CS Kipchumba Murkomen releases SGR agreement for public scrutiny. Some key loan terms:

~ Loan amount not exceeding $1.6Bn

~ 2.0% per annum interest

~ 0.25% management fee

~ 20-year tenure with a 7yr grace period

~ preference for the purchase of goods from China” (Kenyan Wallstreet, 06.11.2022).

The SGR Agreement decides that the Kenyan Government has 13 years to repay the loans for the Standard Gauge Railway (SGR). This is happening after the 7 year grace period. The agreement was signed off on the 14^th May 2014 and 7 years after that is last year May 2021.

There been speculations about this agreement ever since the Jubilee government signed it and accepted it’s terms. It was even at one point, rumours that the Kenyan government had signed off the Mombasa Port operations to the China EXIM Bank.

What it instead says in addition to the terms of the direct financial manner. It says something very interesting…

A key parts of the SGR Agreement is this, as well as the other mentioned terms: “The Borrower undertakes to procure that the Government of Kenya or the relevant authorities of Kenya shall stipulate and issue preferential policies, regulations or approvals in relation to RDF which could be applied in priority to make the repayment of loans in relation to the Project as owning to the Lender, the Long Term Service Agreement and its due performance, the revenues generated from the Project which will be applied in priority to make the repayment of loans in relation to the Project as owing to the Lender (except for the expenditures of operation and management of the Project), the Inlander Container Depot (inland port) established in Nairobi and its mandatory customs clearance, and all other necessary policies or approvals, with an aim to ensuring the due operation of the Project and the repayment of such loans in relation to the Project as owing to the Leader” (SGR Agreement, 2014).

Here the borrower is setting the terms of usage and how the transport policies are set. This is now in print and in public. It now makes perfect sense why the authorities and the government ordered all goods or movement of cargo is directed to the SGR. That is done in accordance with the agreement actually. Because the stipulation is actually there…

Certainly, you can wonder if Beijing or the China Exim Bank is happy with the leakage of the agreement between them and the Kenyan Government. They would most likely be happy to have it under seal and hidden from the public space. Because, now the realities of this agreement is in the public domain.

The SGR is already a sort of failure and lack of creating revenue. That’s why the SGR haven’t been profitable or had the ability be viable. That’s why the Kenyan Government had to direct all cargo to go through the SGR and to the Navisha or Inland Port in Nairobi. Therefore, this agreement is just showing how bad this deal was.

The one winning here is China and they are getting lots of interests out of it. They are able to get the Kenyan government on their side. The Kenyan Government accepted a huge loan for an expensive railway. A railway that will take forever to be a feasible enterprise. That’s why these terms will be a liability and an expensive expense for the taxpayers in the years to come. While the SGR will not deliver or be able to re-coup the debt. That’s what is tragic here… Peace.

Uganda: Over Hundred CSOs Express Concern over Islamic Development Bank’s Financing of EACOP (22.09.2022)

National Unity Platform (NUP): Robert Kyagulanyi aka Bobi Wine – Statement on the Resolution of the European Parliament on the Violation of Human Rights linked to Investments in the Oil Pipeline (21.09.2022)

National Environment Management Authority (NEMA): Clarification on information concerning the Environment and Social Impact Assessment (EISA) Reports for Oil and Gas Projects in Uganda (19.09.2022)

Opinion: The EACOP is no bargain

This week there been new talks of the East African Crude Oil Pipe Line (EACOP). That comes after the European Union Parliament came with a Motion, which reflect dire concerns about it. The EACOP pipeline will go from the Lake Albert Basin down to Port of Tanga in Tanzania. It is a joint venture deal, but the one who has the most leverage is the French Company Total. While EACOP itself is a United Kingdom based corporation.

The others with smaller stakes are the Uganda National Oil Corporation (UNOC) and the Tanzania Petroleum Development Corporation (TPDC). Not to forget the even smaller ownership of the China National Offshore Oil Corporation. So, it is not like the EACOP or the drilling of petroleum is done by solely Ugandan ownership either. Not like Tanzania has a huge stake in it either.

Yes, CNOOC and Total will pay taxes and transport fees of sorts, which is normal for a pipeline to the respective nations. However, they are still able and licenced to drill or exploit the oil fields in the Lake Albert Basin. They are doing that and then later transporting the petroleum from Bunyoro to the coast of Tanzania, which is a long pipeline over vast different environments, which could cause harm or endanger it even. That’s only one thing in this enterprise.

The drilling and exploitation of the petroleum in Lake Albert basin and parts of it is done in Murchison Falls National Park. Meaning the ones with the licence to drill will do so in areas, which has already been facilitated to reserve the nature and the habitats of the species living there. In beautiful surroundings and unique as well. Therefore, the whole petroleum industry could cast a spell on the area as a whole. Especially, if there was something going wrong or an “accident” would occur, which could cause massive damage to the areas.

The EU Parliament Motion has been called “colonial” and “Supremacist” also said to block industrial development in East Africa. They are calling it undermining and saying the Europeans should mine their own business. Which is very ironic, when Total, the French company is the main investor and company involved. The lions share of it run by Total and not by anyone else. Before that UK businesses Tullow and Heritage had vast control of the licences to drill in Lake Albert Basin. So, it’s very weird to call one thing “colonial” and yet allowing the same “colonial” enterprises to run business there.

The Ugandans speaking ill of it. Should first ask for Good Governance and proper due diligence over the projects. The development done and the deals should be looked into. Because, little to none is public. Only the diplomatic papers and some shareholding or ownership details are known. The licencing deals for drilling is “secret” and the transactional parts of also under wraps. The same with registration and practically ownership of the UNOC and TPDC. They are not entities who is very open or transparent about.

That’s why when the minority isn’t transparent, and the Total company isn’t either. The grand public cannot know what is at stake. Who is getting a cut and who is really earning on it. Not like the monies or the credible profits cannot be siphoned. It is not like it is in the domain of the public or it has a knowledge about that.

That’s the making of the President and his Office. They have kept it all hidden for a reason. It is his business and not the citizens one. It is his “oil” and he can do what he likes. He don’t like nosy people and don’t want to be bothered with real questions. That’s why its been kept secret… and it’s deliberately so. Peace.

The EACOP Pipeline might have a harder time getting funding after EU Parliament Motion condemning it…

The East African Crude Oil Export Pipeline (EACOP) could face a new hurdle and delays. As there is not only a collective of activists and organizations working to stifle the options of funding the EACOP. The EACOP needs funding to be able to be built. The EACOP has to get funding from either Corporate Banks or Multi-National Institutions. The World Bank said in 2019 that it wouldn’t support it and neither will International Monetary Fund (IMF). Therefore, the EACOP needs to get $5 billion elsewhere to fund the building of it.

Because of the Motion today made by the European Parliament. I had to go back and find more new information into the EACOP. The EACOP haven’t been a steady operation or a quick fix. No, this has been a slow train moving. There has been slowly getting things in order and the it was only last year both Uganda and Tanzania had settle their negotiations. This is why it haven’t gotten further. The slow approach is also a reason why the EACOP is lacking funding and not being operational. The deadlines of the production, the exports and a possibly a refinery in Uganda has also been on hold. Therefore, the EU motion could only get into existence because of the slow movements from the Government of Uganda.

Take a look here…

EACOP Ownership:

“The Tilenga oilfield, to the north of Lake Albert, will include operations within the Murchison Falls National Park, and is operated and owned 56.67% by TotalEnergies. The Kingfisher oilfield, at the southern end of the lake, is being developed by CNOOC which owns 28.33%, and Uganda’s UNOC, which has a 15% stake. The two projects are expected to start producing oil in 2025 and reach a peak production of 230,000 barrels per day, which will rank the Lake Albert oil fields as one of Africa’s top 10 oil projects. The shareholders in the pipeline are TotalEnergies (62%), UNOC (15%), Tanzania Petroleum Development Corporation TPDC (15%) and CNOOC (8%)” (Tonderayi Mukeredzi – ‘Controversial East Africa oil pipeline moves one step closer to construction’ 25.03.2022, ChinaDialogue,net).

EACOP Funding:

“The East African Crude Oil Export Pipeline, which will have a daily capacity of 216,000 barrels a day, will be funded on a 40% to 60% equity-debt ratio, according to UNOC, a partner in the project. The link is designed to move land-locked Uganda’s oil to international markets. The Islamic Development Bank became the first lender to commit funding to the project when it approved $100 million for EACOP at the weekend. TotalEnergies SE is leading development of the project with a 62% stake in the cross-border pipeline. UNOC and Tanzania Petroleum Development Corp. each have a 15% interest, and the rest is owned by China’s Cnooc Ltd” (Fred Ojambo – ‘Uganda expects all pledged funding for oil pipeline by end of November’ 12.09.2022, WorldOil.com)

EU Parliament Motion:

“Calls for the EU and the international community to exert maximum pressure on Ugandan and Tanzanian authorities, as well as the project promoters and stakeholders, to protect the environment and to put an end to the extractive activities in protected and sensitive ecosystems, including the shores of Lake Albert, and commit to using the best available means to preserve the culture, health, and future of the communities affected and to explore alternatives in line with international climate and biodiversity commitments; calls on the promoters of the EACOP project in Uganda and Tanzania to resolve all disputes that should have been resolved prior to the launch of the project, and to take into account all the above-mentioned risks, threatening this project; urges TotalEnergies to take one year before launching the project to study the feasibility of an alternative route to better safeguard protected and sensitive ecosystems and the water resources of Uganda and Tanzania, limiting the vulnerability of the watersheds in the African Great Lakes region, which is a critical resource for the region, and to explore alternative projects based on renewable energies for better economic development” (European Parliament – ‘JOINT MOTION FOR A RESOLUTION on violations of human rights in Uganda and Tanzania linked to investments in fossil fuels projects’ 14.09.2022).

We know the EU Parliament Motion is causing a stir in Kampala and Dodoma. There will be words and possible ramifications of this. The EACOP is mostly owned and run by the Total Energie and that’s French. So, the French or France, which is a Member State in the EU could suddenly apply more pressure on the French Petroleum Company. That would further delay and possibly stop the EACOP pipeline. Since, the pipeline isn’t majority owned by the governments of Uganda or Tanzania. This is why the condemnation of the EU Parliament matters.

Just like the activists and NGOs who is working on overtime pressuring banks and lenders to the EACOP. That in combination of the new policies of greener technology or following climate change programs within the World Bank (WB) or International Monetary Fund (IMF). The EACOP certainly needs lots of funding and fiscal funds. That’s why the EU Parliament condemnation can alter a lot and add pressure, which is even stronger than the activists or NGOs who is already running a marathon with it.

This pipeline is contested, not only because of the parties involved and the respective republic’s. No, it is because of the environments that the oil is drilled and where the petroleum pipeline route goes as well. Peace.