The African Development Bank(AfDB) has denied claims that it plans to provide funding to Uganda’s oil pipeline project.
These follows a protest letter by climate change crusaders and civil society groups urging the financial institution to back off from the project due to its potential social and environmental damage.
The Bank has denied its involvement in the upstream oil or gas pipeline projects in East Africa, insisting that the project is not one of its funding programs.
The proposed oil pipeline measures 1,445 Kilometres and runs from Hoima in Uganda to the port of Tanga in Tanzania.
Construction of the pipeline is poised to open up critical ecosystems including Murchison Falls National Park to oil extraction.
But environmental conservationists say the project will cause large-scale displacement of communities and pose grave risks to protected environments, water sources and wetlands in both Uganda and Tanzania.
As such, the project is facing significant local community and civil society resistance.
The pipeline’s initial projected completion date was 2020, allowing full-scale oil extraction to commence shortly thereafter in 2021. However, the project has faced several delays.
As of September 2019, work on the pipeline was suspended after the collapse of Tullow’s plan to sell its stake to the other project leads. The joint venture partners and the Ugandan government recommenced talks this year. A deal is yet to be signed.
Uganda’s oil pipeline project is being undertaken by Tullow, Total, and CNOOC; in partnership with the Ugandan and Tanzanian state-owned oil companies. Debt financing for the pipeline (amounting to approximately US$ 2.5 billion) is being arranged by Stanbic Bank Uganda and Sumitomo Mitsui.
The Intergovernmental Agreement between Uganda and Tanzania was signed in May 2017, securing the pipeline route.
Oil was discovered in Uganda’s Albertine Graben in 2006 by exploration company Tullow Oil. Production licenses for the oil fields were issued by the Government of Uganda in August 2016 but commercial production has not yet begun, as it is contingent on the completion of the export pipeline.
Extraction at the oil fields and the pipeline are associated facilities, considered twin components of the project.
Uganda is rushing to join the oil-exporting nations in East Africa, ahead of Kenya, which intends to construct a 824 km pipeline from Lokichar in Turkana County to the port of Lamu. The pipeline will pass through six counties of Turkana, Samburu, Isiolo, Meru, Garissa and Lamu.