The East African Crude Oil Pipeline project (EACOP) seems so spicy for entrepreneurs in the world’s second biggest economy to notice.
EACOP is the largest oil pipeline project in the region, spanning a 30-metre corridor and 1443km length, has TotalEnergies as the major shareholder with a 62% stake. Uganda National Oil Company (UNOC) and Tanzania Petroleum Development Corporation holds 15% shares each.
But it looks like for the first time since the idea of setting up the world longest heated pipeline was conceived by the Uganda Government, the Chinese appear to be taking over the financing of which has been hit by funding hitches as it nears implementation.
Habari Daily has learnt that major lenders who have pledged billions of dollars towards the projects have bowed to pressure from climate activists, and appear to have abandoned the idea altogether. Activists say the ecosystems in protected areas which the 50°C heated pipeline will cross will be harmed.
Reports have since revealed that Standard Chartered Bank, one of the potential financiers, withdrew from the $5 billion project after activists said it could generate seven times more carbon emissions per year than the rest of the country.
A StanChart spokesman was quoted as saying the lender “isn’t involved in the financing” of the 1,443km crude pipeline from the oilfields in western Uganda to the Indian Ocean coast of Tanzania.
Industry watchers are worried that while the rigs are up and upstream field development is progressing, this funding glitch will make Uganda fall behind the schedule set by the government for the first oil to flow in 2025.
“The Chinese, who are known to be fast in financial decision making may bridge this gap since they need oil to fan its industrial powerhouse,” said Anatoli Mutumba, a Kampala based economic analyst.
TotalEnergies, the French energy giant and lead investor in Uganda’s oil industry, has since signed a deal with China Petroleum Pipeline Engineering (CPP) for the construction and supply of line pipe.
This landmark move tilts the trans-border the multi-billion dollar project to Beijing, where the biggest chunk of the loans is expected to come from.
Martin Tiffen, the EACOP Managing Director had earlier on announced that Australian firm Worley was tipped for the engineering, procurement and construction management tender.
On the other hand, Italy’s ISOF Construzioni SRL was evaluated to manage the coating plant for the pipes and fittings, now taken over by CPP
