The East African Crude Oil Pipeline (EACOP) project, valued at $5 billion, is facing debt financing challenges, prompting stakeholders like TotalEnergies and CNOOC to inject additional funds to keep the venture on track.
This pipeline, designed to transport oil from Uganda’s Lake Albert reserves to Tanzania’s port of Tanga, has sparked controversy, with environmentalists and some international observers warning of environmental damage and community displacement.
As a result of these concerns, six Western banks, including BNP Paribas, Société Générale, and Barclays, declined to finance the project. In response, Uganda’s Minister of Energy and Mineral Development, Ruth Nankabirwa, recently traveled to Beijing to seek potential Chinese investors, whom she sees as key to the project’s future.
The funding approach has also shifted due to challenges with Western banks, moving from an initial structure of 60% debt and 40% equity to a more balanced split. “Equity now surpasses debt, from 40% to nearly 52%, showing shareholders’ commitment to securing the necessary funds,” Nankabirwa stated. Uganda has pledged an additional $45 million to the project, with Tanzania expected to match this. TotalEnergies has also recently committed an additional $400 million.
