Uganda’s $5 billion EACOP pipeline is currently experiencing challenging debt negotiations

Uganda’s energy minister told Reuters that partners working on the $5 billion East African Crude Oil Pipeline (EACOP) are investing extra money in the project to keep it moving forward as financial financing is difficult to secure.

After six Western banks, including BNP Paribas, Société Generale, and Barclays, promised not to finance the East African Crude Oil Pipeline (EACOP) in response to pressure from climate activists, Minister Ruth Nankabirwa recently traveled to Beijing to meet with possible Chinese funders who are thought to be essential to the project’s success.

As part of a larger $15 billion energy plan by TotalEnergies (TTEF.PA), opens new tab, China’s CNOOC, and other partners to develop the Kingfisher and Tilenga discoveries near Lake Albert, EACOP connects oilfields in Uganda to Tanga port in Tanzania.

According to Nankabirwa, obtaining funds has necessitated further bank lobbying and reorganizing the package to include more stakeholder equity than debt, deviating from the original plan to have 60% covered by bank loans and 40% by equity. A final decision on debt financing is anticipated before the year ends.

According to Nankabirwa, Tanzania would be asked to equal the $400 million that TotalEnergies has pledged to inject, along with an additional $45 million from Uganda.

“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,” she stated.

“As you look for money to put in, that means the debt, the external tranche, reduces,” said Nankabirwa.

According to Nankabirwa, she met with a number of banks, including the Export-Import Bank of China, while in Beijing in June. She requested that they expedite their choices regarding loan funding.

Despite protests from environmentalists, Nankabirwa claimed, almost a dozen European banks—whom she did not name—were also thinking about backing EACOP.