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The joint oil project between Tanzania, Uganda, and external stakeholders, the East African Crude Oil Pipeline (EACOP), seems to be facing some financing challenges. As a result, its two primary foreign stakeholders, China National Offshore Oil Corporation (CNOOC), and TotalEnergies are stepping in to infuse more cash into the project
The joint oil project between Tanzania, Uganda, and external stakeholders, the East African Crude Oil Pipeline (EACOP), seems to be facing some financing challenges. As a result, its two primary foreign stakeholders, China National Offshore Oil Corporation (CNOOC), and TotalEnergies are stepping in to infuse more cash into the project
The East African Crude Oil Pipeline (EACOP) project is intended to deliver oil from Uganda’s Lake Albert reserves to the port of Tanga in Tanzania The project, worth USD 5 billion, has faced resistance from environmentalists and international community members, which claims that the project will damage the environment around it and cause the displacement of communities within its radius. As a result, six Western banks, including BNP Paribas, Société Generale, and Barclays, rejected financing the project.
The Ugandan Minister of Energy and Mineral Development, Ruth Nankabirwa recently traveled to Beijing to meet with possible Chinese funders who are thought to be essential to the project’s success. According to reports, she acknowledged that significant restructuring has been necessary to get funding. Due to issues with the Western banks, the funding strategy has changed from its initial intention of 60% loan and 40% equity to a virtually equal split. Now equity is surpassing debt, from 40% to almost 52%, it is quite evident that shareholders are committed to looking for the money to make sure the project doesn’t stall.
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According to the minister, Uganda has committed an extra USD 45 million to the project, and Tanzania is expected to equal that amount. TotalEnergies just committed to providing an additional USD 400 million.
