A top official revealed on Monday that Uganda is in advanced talks with the Chinese export credit agency SINOSURE to secure financing for its crude oil pipeline after environmentalist pressure caused some Western banks to back away from the project.
East African Crude Oil Pipeline (EACOP), a 1,445-kilometer (898-mile) pipeline, is intended to assist Uganda in exporting its crude from oilfields in the nation’s western region via a port on Tanzania’s Indian Ocean coast.
The governments of Uganda, TotalEnergies of France, CNOOC of China, and Tanzania’s Tanzania Petroleum Development Corporation (TPDC) jointly own it.
The project will cost $5 billion, including the cost of credit 40% of the money will be raised through debt, while the rest will come from equity, Irene Bateebe, permanent secretary for Uganda’s Ministry of Energy and Mineral Development, told Reuters.
“Together with others, we are raising some financing through SINOSURE, which is going to be one of our biggest contributors to the debt,” she said.
“We are working towards financial closure. So we are at the tail end of the discussions for the financial close, and we are confident that by the end of October of this year, we should close the debt component.”
Bateebe did not provide a precise figure for the amount of credit that Sinosure would offer.
She claimed that they had experienced frustration with Western banks as a result of pressure from environmental organisations to stop financing the project on the grounds that the pipeline would damage the environment and increase carbon emissions.
In 2021, more than 260 groups, including Greenpeace and Friends of the Earth, signed a letter urging banks not to finance the project. Human Rights Watch has also denounced the pipeline.
Germany’s lender, Deutsche Bank, has since said it will not be involved in financing the pipeline.
Uganda discovered oil deposits more than ten years ago, and commercial production is expected to begin in 2025.
