Uganda’s US dollars 5 Billion oil pipeline negotiations are currently ongoing with China after Western banks decided to back out of the project.
This was caused by the pressure from environmental activists who caused several banks from the West to back out of the project.
According to the Permanent Secretary for Ministry of Energy and Mineral Development, Irene Pauline Batebe, on Monday, September 25, 2023, said that Uganda is in advanced discussions with Chinese export credit agency SINOSURE to offer funding for the crude oil pipeline.
She said that, the project will cost US dollars 5 billion which includes the cost of credit and that 40% of the funding will be generated through loan and the rest through equity.
Batebe said that, they are raising some financing through SINOSURE which is going to be one of the biggest contributors to the debt and that they are working towards financial close.
She added that, the ministry is at the tail-end of the discussions for the financial close and are confident that by the end of October, 2023, they should close the debt component.
However, Batebe did not provide a precise figure for the amount of credit that SINOSURE would offer though she disclosed that, they had experienced difficulties with Western banks as a result of pressure from environmental organizations to stop financing the project on the basis that the pipeline would damage the environment and increase carbon emissions.
In 2021, more than 260 organizations signed a statement requesting banks not to fund the project. The pipeline has also been condemned by the Human Rights Watch.
The East African Crude Oil Pipeline (EACOP), a 1,445-kilometer (898-mile) pipeline, is intended to assist Uganda in exporting its petroleum from oilfields in Uganda’s western region to a port on Tanzania’s Indian Ocean coast.
The shareholders in EACOP are affiliates of the three upstream joint venture partners (the Uganda National Oil Company, TotalEnergies E&P Uganda and CNOOC Uganda) together with the Tanzania Petroleum Development Corporation. Shareholdings are TotalEnergies 62%, UNOC and TPDC 15% each and CNOOC 8%.
Oil reserves were found in Uganda more than 10 years ago and commercial production is anticipated to start in 2025.
