China Export-Import Bank, two African banks lead new funders of Uganda’s EACOP

China Export-Import Bank is among Chinese banks along two other African banks that have agreed to finance the East African Crude Oil Pipeline (EACOP), Energy Minister Ruth Nankabirwa has said.

The lenders will provide $3b (Shs11.2 trillion).  The project is estimated to cost between $3.5 billion and $4 billion, of which 60 percent comprises debt raising and 40 percent equity.

“Two companies from two African countries are offering the money. Part of the money is going to come from Exim Bank of China,” Ms Nankabirwa said on Friday while granted a petroleum exploration licence of the Turaco oil block in Ntoroko District to Australia’s DGR resources.

This comes as several European banks, including Standard Chartered Bank, indicated that they would not be financing the project, flagging it as an environment risk.

A number of climate change activists have successfully courted European banks against financing the pipeline needed to transport oil from the oilfields in the Albertine to the port of Tanga in Tanzania to world markets.

Nankabirwa confirmed that the Ministry of Finance is honoring Uganda National Oil Company’s equity payments to EACOP. Equity to the project is estimated at $2.4 Billion.

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. Others include Tanzania Petroleum Development Corporation. Shareholdings are TotalEnergies 62%, UNOC and TPDC 15% each, and CNOOC 8%.

A total of Shs7.45 trillion ($2 billion) will be equity financed by shareholders, who include Total Energies (62 percent), Uganda National Oil Company or Unoc (15 percent), Tanzania Petroleum Development Corporation or TPDC (15 percent), and China National Offshore Oil Corporation or Cnooc (eight percent).

EACOP has so far declared funding from Saudi’s Islamic Development Bank, and Afrexim Bank, totalling Shs1.2 trillion ($300m). 

The executive director of Petroleum Authority of Uganda, Mr Ernest Rubondo, said the construction of preparatory infrastructure such as camps, the coating plant for insulating line pipes, and the main storage and export terminal in Tanga, are ongoing.