The not-so-hidden cost to “mega” energy deals The Energy Charter Treaty (ECT) in East Africa (in conversation with Olivia Costa and Brenda Akankunda)
Lack of access to modern energy services remains a major constraint to economic development in many regions, and perhaps in Africa most of all. According to the Africa development Bank, only 40 percent of the continent’s people have regular access to electricity. African governments are trying to expand their capacity to provide energy to their citizens, and this has seen a proliferation of “mega energy deals”, where governments sign deals investors, usually foreign, who pledge to work with the government to build energy generation facilities, upgrade energy grids and other such cost-intensive developments.
However, this all happens in a context where we know what we have to do to solve the climate crisis. We must keep coal, oil and gas in the ground. What happens when African governments try to pass progressive policies to protect the environment, and to protect people from some of the harmful practices of these investors? The fossil fuel industry has a secret powerful weapon to keep countries locked in on fossil fuels: The Energy Charter Treaty (ECT).
The ECT is an International Investment Agreement (IIAs) that establishes a multilateral framework for cross-border cooperation in the energy industry. The treaty covers all aspects of commercial energy activities including trade, investments and energy efficiency, and it is currently on a massive geographical expansion into Africa, Asia and Latin America.
History shows that, though the Energy Charter Treaty makes many promises of burgeoning investment, the reality is that it does not significantly improve investment prospects. Instead, the ECT’s Investor State Dispute Settlement (ISDS) provisions give foreign investors in the energy sector sweeping rights to directly sue states in international tribunals of three private lawyers, the arbitrators. Companies can be awarded dizzying sums in compensation for government actions that have allegedly damaged their investments, either directly through ‘expropriation’ or indirectly through regulations of virtually any kind.
In many of those countries in the process of acceding to the ECT, hardly anyone seems to have even heard of the agreement, let alone have thoroughly examined its political, legal, and financial risks. And even with a supposed “modernization process”, which is supposed to deal with the problematic clauses in the agreement, the treaty continues to threaten to bind yet more countries to corporate-friendly energy policies.
Here at the State of Power Podcast, we are concerned with power. How it can be generated in a fair and equitable manner, without endangering the planet or livelihoods. On this episode of the podcast, we take a specific look at East Africa, where five of the East African Community (EAC) countries have signed the non-legally binding International Energy Charter (IEC), which is a political declaration aimed at strengthening energy cooperation among signatory countries and international organizations, and does not impose any legal or financial obligation. The Governments of Burundi, Tanzania and Uganda signed the IEC in 2015, while the Government of Rwanda in 2016, and the Government of Kenya and the East African Community as an intergovernmental institution signed the charter in 2017. As a consequence of this political declaration, the ECT Secretariat, whose survival depends on continuation of the treaty, continues to lobby these countries to take additional steps towards acceding to the Energy Charter treaty, which , because of its ISDS clauses, is not as innocuous as the International Energy Charter.
To get a better understanding of what exactly is going on, we speak to Olivia Costa, who is the executive director of Tanzania Trade and investment coalition, a grouping of thirteen Civil Society Organizations in the East African country. Joining her is Brenda Akankunda, who works with the Southern and Eastern Africa trade Information and Negotiations Institute (SEATINI), and is based in Uganda. Both organizations focus on Trade and Investment.