Delays in China financing send Eacop partners into panic

It has been over a year since Chinese financiers and the developers of the East African Crude Oil Pipeline (Eacop) started discussing the project’s debt financing. However, there is still a significant gap in the financing structure as the loans, totaling around $3 billion, are not expected to be secured in the near future. This has prompted shareholders to take emergency measures to raise additional equity funding.

When additional funding was needed for the project last month, the Eacop shareholders stepped up to raise the necessary funds and prevent any delays in the production and export of crude from Uganda’s oilfields in the Lake Albert region.

Last month, TotalEnergies executives provided an update on the project’s progress, stating that the physical works had reached 33 percent completion by the end of April. Ensuring proper thermal insulation of the line pipes, efficiently stringing and laying them, and constructing pump stations are all crucial tasks that need to be completed before the anticipated first oil target in the coming year.

Officials have stated that ongoing physical works on the project are at risk of stalling by July 1 due to a cash crisis. This crisis has arisen as the $2 billion equity funds raised by Eacop shareholders have been depleted, leaving a funding gap that needs to be addressed.

Uganda National Oil Company (Unoc) – the state-owned firm responsible for managing Uganda’s commercial interests in the oil and gas projects – is planning to provide an additional $35.38 million this month to address the recent cash calls resulting from delayed debt financing, according to CEO Proscovia Nabbanja.

She explained that the funds are needed to bridge the gap between equity and debt financing. She mentioned that all shareholders have already made their equity contributions, but now they must address the funding crisis that the project will face due to the slow progress in finalizing the debt financing.