MAJOR re- insurance companies have backed out of the East African Crude Oil Pipeline (EACOP) project,citing lack of environmental considerations and reported community pollution.
The companies, Sirius Point, Riverstone International, Enstar Group, and specialty insurers Blenheim and SA Meacock, have reportedly ruled out involvement in the controversial project, and about 28 re-insurers are reported to have made known their positions not to offer insurance for EACOP because of the significant pollution and human rights risks it poses.
Their decisions follow months of concerted efforts by environmental organisations like the Coal Action Network, Insure Our Future and StopEACOP to hold insurance firms accountable for their involvement in dirty energy projects that endanger local communities and pollute vital ecosystems.
The development has raised the hope that pressure will now mount on remaining insurers like AIG, Tokio Marine, Chaucer and Hiscox, to rule out involvement in the pipeline project, while Blenheim and SA Meacock offered equally clear statements, Sirius Point confirmed: “We are not participating in the EACOP tender.”
StopEACOP officials said these companies’ decisions to publicly distance themselves from EACOP underscore the project’s increasing financial risk and the growing consensus on the need to protect current and future generations from dangerous overheating and extreme weather events.
The proposed pipeline is majority-owned 62 percent by French oil giant Total, with stakes also held by the state oil companies of China, Uganda and Tanzania.
However, the project has struggled to raise adequate insurance, as well as $3 billion needed in financing, leading to delay in construction by over four years.
In October 2023, Uganda’s energy minister said that securing insurance has been the biggest challenge to the pipeline’s construction, while industry sources say that local and international criticisms have led Western banks to recoil from the project, as Chinese lenders are still months from making a final decision as they assess potential blowback.
Climate scientists have unanimously agreed that new or expanded fossil fuel projects, like EACOP, threatens the future of human life on earth.
Disturbing crackdowns on environmental and human rights defenders by authorities in Uganda and Tanzania have marred plans for the 1,443km pipeline, intended to stretch from Hoima in Uganda to Tanga in Tanzania.
The Global Witness and Human Rights Watchreports have detailed harassment, rights infringements and dozens of arbitrary arrests, while the European Parliament has condemned the project, while faith leaders have discovered massive disruption of sacred burial grounds to make way for the pipeline.
Seven Ugandan university students were recently imprisoned and held at the Luzira Maximum Security Prison for weeks prior to their release for peacefully petitioning their government to halt EACOP.
Also, seven other peaceful protesters, arrested on November 20, 2023, have been charged with “incitement to violence” for delivering a petition to the Chinese embassy in Kampala and are currently awaiting trial.
The arrests have been condemned by the UN Special Rapporteur on human rights defenders.
During the recent COP28, over 190 nations acknowledged the necessity of transitioning away from fossil fuels and the importance of financial institutions investing in clean solutions.
Building on that momentum, the insurance industry was tasked with the responsibility helping steer the world towards a safe, healthy and just future, and the withdrawal of SiriusPoint, Riverstone, Blenheim, Enstar and SA Meacock from the EACOP project is seen as a step in that direction.
Climate Finance Strategist for Coal Action Network, Will Attenborough, said, “Insurers are the great enablers. They can determine whether polluters continue to put our kids and communities in danger, or whether we build clean energy solutions that will protect us from global overheating.
“What will AIG and Chaucer choose at this crucial moment, short-term profits from dirty energy leading to increasingly violent wildfires, floods and rising food prices? Or the safe, healthy world we all want for our loved ones? We need companies like Tokio Marine and Hiscox to make the right choice now – later is too late.”
StopEACOP Campaign Coordinator, Zaki Mamdoo, said, “The decision by SiriusPoint, Riverstone International, Enstar Group, Blenheim and SA Meacock to rule out involvement in the EACOP project is a significant win and further proof that even the insurance industry, with its deep-seated history in providing cover for the harmful and damaging projects of profit-driven corporations, is waking up to the enormous climate and socioeconomic risks of supporting new oil and gas projects.
“We urge the remaining insurers linked to EACOP, including Lloyd’s and Liberty Mutual, to follow suit and withdraw in the face of widespread human rights abuses and threats to communities and protected ecosystems across East Africa.”
Director of Environment Governance Institute Uganda, Samuel Okulony said, “The withdrawal of these insurers deals a major blow to the viability of the EACOP project and provides hope to local communities facing displacement and activists risking their lives to defend land and nature.”
“The lack of insurance and rising costs reinforce that this pipeline contradicts Uganda’s climate commitments and the need for a just transition that protects human rights. Given the devastating social and environmental consequences, we call on all remaining project partners to put frontline communities above profit.”
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