The $1 trillion ‘Belt and Road Initiative’ (BRI) has been poorly executed and with such lack of transparency, that it is hard to imagine the extent of the damage caused by lending vast sums of money to developing nations. A case in point is the African continent and its energy-rich potential.
With Western lenders pulling out of the $5 billion East African Crude Oil Pipeline (EACOP), the Export-Import Bank of China (EXIM) and other state-owned entities have stepped in to finance the remaining $3 billion necessary to complete it. The 1445 km long project from the Ugandan oilfields of Lake Albert is expected to transport 216,000 barrels upon completion. After reaching the port of Tanga, in Tanzania, in the Indian Ocean, it will then be shipped to international markets. The Industrial and Commercial Bank of China (ICBC) owns a 20% stake in the Standard Bank of South Africa and is cooperating with it to act as financial advisors and debt arrangers for EACOP. Although French oil major Total Energies holds 62% of the stake in the pipeline, Uganda National Oil Company and Tanzania Petroleum Development Corporation have a respective 15% stake each, with the remaining 8% in the hands of the China National Offshore Oil Corporation (CNOOC), which has already started drilling at the Kingfisher Oilfield at Lake Albert, while Total Energies is operating the other oilfield at Tilanga in western Uganda. It has signed deals with the China Petroleum Engineering and Construction Company to construct the Tilanga drilling facilities. The pipeline itself is being supplied by China Petroleum Pipeline Engineering.
Chinese infrastructure projects have not typically had a happy outcome in the recent past. After heavily indebted countries feared their international credit rating would be damaged, China lent to African countries through shell companies, such as a $1.5 billion loan to Zambia from Chinese banks that did not appear on the accounts of the public for years. As questions arise as to how exactly these massive loans will be repaid in the future, we can take a look at existing actions taken to assess China’s future tactics. In a series of years-long digital intrusions, Kenya has faced cyber-attacks from Chinese hackers attempting to infiltrate key ministries and State institutions to keep abreast of its lending status and debt repayment intentions. Several reports show that 35% of BRI infrastructure projects are plagued by corruption scandals, labor violations, environmental hazards, and public protests. Over the past few years, China has cooperated with training police institutions across the African continent and spreading its message of security and stability among all the regimes worried about instability. The training of presidential guards and so called ‘hit squads’ that target political opponents are also a familiar tactic. More than 15 African countries have a new or refurbished African themed parliament building named after a leader constructed by China. The buildings typically cost hundreds of millions and are a free gift, but the billions of sovereign and hidden debts incurred by these countries are the real point of concern. Many people have also raised concerns about such infrastructure projects being used for espionage after the 2018 scandal of the African Union headquarters in Ethiopia being bugged by China.
The EACOP project is going to traverse 296 kms in Uganda across 10 districts and 1147 kms in Tanzania across 20 districts. 95% of these oil and gas operations are within the protected wildlife preserves of Kabwoha and Bugungu and will have a definite impact on water bodies that are shared by complex international agreements. The impact of China’s involvement gave rise to concerns about how exactly resettlement will be handled, much like climate and environmental disasters, human rights abuses during the construction of the pipeline and job losses in agriculture, tourism, clean energy and other sectors. The destruction of plateaus and wetlands as well as the potential pollution of Lake Victoria is another concern that was raised before the implementation of the project. Earlier in May a score of scientists, including climate experts from the Intergovernmental Panel on Climate Change (IPCC), denounced in a report that the EACOP project as a “carbon bomb” that will produce “over the twenty-five years announced, more than 379 million tonnes of CO2 equivalent”. It also “contributes to documented human rights violations in Uganda and Tanzania.” If the climate concerns are not enough to motivate the halt of the project, the displacement of tribes, rise in food insecurity in the region, inability to adapt to a high-tech environment, human-wildlife conflicts, and rise in gender violence should motivate an overall reconsideration of the project. The difficulties in executing such an encumbered project should deter China from its high-risk investment strategy, but it does not appear to be stopping them from rushing to upstage the West and to some extent dooming the whole world to a future where the two African countries are devastated and further contribute to the global temperature rises by 1.5 degrees.