The East African Crude Oil Pipeline (EACOP) holding company announced the successful closure of its first round of debt financing, securing support from a consortium of African and Middle Eastern banks. This development signals a resurgence of investor confidence in the Uganda-Tanzania pipeline project, which has faced significant opposition from environmentalists.
Leading the consortium are South Africa’s Standard Bank and its Ugandan subsidiary, Stanbic Bank, alongside Egypt’s African Export–Import Bank (Afreximbank) and KCB Bank Uganda Ltd, a subsidiary of Kenya Commercial Bank (KCB) Group. The Islamic Corporation for the Development of the Private Sector (ICD) from Saudi Arabia completed the syndicated financing, raising the initial tranche of debt capital for the $5 billion (Shs18.2 trillion) project.
“The successful closing of this first tranche of external financing represents a significant milestone for EACOP and its shareholders,” EACOP Ltd stated.
The 1,443km EACOP will transport Uganda’s crude oil from the mid-western oil fields to Tanga port in Tanzania. The project’s ownership structure includes TotalEnergies (62%), Uganda National Oil Company Limited (UNOC – 15%), China National Offshore Oil Corporation (CNOOC – 8%), and Tanzania’s Petroleum Development Corporation (TPDC – 15%).
Peter Holding, EACOP Ltd.’s Chief Finance Officer, described the financing as a “significant milestone” and an “endorsement by the regional financers—banks in Africa and the Middle East.” He refrained from disclosing specific contributions from each bank or the equity-to-debt ratios, citing “confidentiality clauses.”
Standard Bank, which has acted as a transactional advisor since 2017, committed $120 million (Shs437.4 billion) to the project despite facing criticism from anti-fossil fuel groups. Holding emphasized the extensive due diligence conducted by the banks, including environmental and biodiversity studies and the Resettlement Action Plan. “There was a lot of back and forth, from looking at our reports to engaging independent consultants to make second opinions, to making the decision,” he explained.
The project has faced significant opposition from environmental activists, who raised concerns about environmental degradation, human rights, and potential greenhouse gas emissions. The pipeline’s route through sensitive ecosystems, including parts of Murchison Falls National Park, has been a major point of contention.
Despite these concerns, Holding argued that the banks’ decisions were based on long-term considerations, not short-term political shifts. “Banks are not shortsighted. They have a long-term view and make long-term considerations,” he said, dismissing suggestions that the financing was influenced by the potential return of Donald Trump to the US presidency and his pro-oil policies. “This financing has been as a result of hard negotiations.”
Since the Final Investment Decision in February 2022, EACOP has been funded by equity financing, enabling significant progress in pipe haulage and infrastructure construction. The second tranche of debt financing is expected mid-year, further propelling the project forward.
