Climate activists opposed to the East African Crude Oil Pipeline (EACOP) have pressured six western banks to cease their funding pledges to the project, complicating its development.
- The US$5 billion pipeline project, which will connect Uganda’s oil fields with the Tanga port in Tanzania, relies greatly on debt financing but acquiring loans has proven difficult.
- According to Uganda’s energy minister Ruth Nankabirwa, the country has faced East, seeking to lobby potential Chinese financiers to facilitate continuation of the project.
- Nankabirwa also said that the country plans to abandon its 60% reliance on bank loans, opting for more equity financing.
“Now equity is surpassing debt, from 40% to now almost 52%, so you see how shareholders are committed to look for the money to make sure the project doesn’t stall,” Nankabirwa told Reuters.
One of the stakeholders in the project, Total Energies, will inject an additional US$400 million. The two countries in the deal will also ramp up their commitments by US$45 million.
Total Energies stands as the largest shareholder in the pipeline project with 62% of the stake. The Uganda’s National Oil Company and Tanzania’s TPDC each owns a 15% stake.
The shortfall in the US$3 billion debt financing occurred after BNP Paribas, Société Generale, and Barclays refused to finance the pipeline. Activists have faulted the project as a hindrance to efforts to combat climate change and fear the project may displace thousands.
Nankabirwa visited Beijing to woe additional investments in June this year, meeting several banks such as the Export-import Bank of China. Uganda chose the Tanzanian route over the Kenyan route in 2016.
