Uganda govt seeks funders for EACOP

KAMPALA — Uganda government has opened its doors for public sector capital funders to provide up to $1.8 billion for the East African Crude Oil Pipeline (EACOP) project.

The project, which aims to transport Uganda’s oil from the Lake Albert oilfields to the Tanzanian port of Tanga, will be financed primarily through debt financing.

In a statement on Monday, the Ministry of Energy and Mineral Development said that whereas the country has made significant achievements in the development of the 60,000 barrels per day Oil Refinery Project, there are still a number of outstanding aspects, including mobilisation of financing for the project.

“The Government of Uganda and the Albertine Graben Energy Consortium (AGEC) have, over the years, made significant achievements in the development of the 60,000 barrels per day Oil Refinery Project in Uganda,” the Ministry said.

“There are, however, a number of outstanding aspects, including mobilisation of financing for the project and the Government of Uganda is now open to receiving offers from public sector capital providers to participate in this nationally and regionally strategic project,” it added.

Last month, Ruth Nankabirwa, the Energy Minister said the Eacop sponsors are only seeking $1.8 billion, which is anticipated to come from a number of Chinese lenders and two African banks.

“We are looking for $1.8 billion for the remainder on debt financing,” said Nankabirwa. “So far two companies from two African countries are offering,” the minister added, refusing to disclose the name of the companies or where they are domiciled.

Irene Batebe, the Permanent Secretary of the Ministry of Energy, said that the “main Chinese banks,” Afriexim Bank, and other African “funders that we cannot mention for now” will provide the majority of the funding needed to finish the project’s debt financing.

Sources close to the project identified China Exim Bank as one of the financiers anticipated to provide some of the loans for the $5 billion project that will transport Uganda’s oil over 1,443 km from the Lake Albert oilfields to the Tanzanian port of Tanga.

China Exim Bank has a history of lending to Uganda’s infrastructure projects.

Industry experts claim that Beijing is using the increased number of project contracts for upstream production that Chinese businesses are winning, together with Eacop’s suggestion that China is the source of financing, to help its companies gain business.

The fourth Chinese company with a significant bid in the oilfield development contracts and export pipeline transactions was China Petroleum Pipeline Engineering, which signed a contract for the construction and delivery of line pipe for Eacop earlier in the year.

The pipeline project’s principal investor is the French supermajor TotalEnergies, which has a 62 percent share.

The Tanzania Petroleum Development Corporation and the Uganda National Oil Company each have a 15 percent stake.

8% of the company is owned by China National Offshore Oil Corporation.

According to the minutes of the 2022 TotalEnergies shareholders meeting, Eacop is funded by 60% loan and 40% equity, with the debt amounting to $2–3 billion