After announcing the final investment decision, the shareholders of the East African Crude Oil Pipeline (Eacop) now turn to looking for money to conclude the deal for financing of the project, which is expected mid this year.
The Eacop is a key infrastructure project that will transport Uganda’s oil to export markets, hence a major component in the commercialisation of the Lake Albert oil resources.
The 1,443km pipeline from Hoima in Uganda to the Indian Ocean port of Tanga in Tanzania, will cost $5 billion – a jump from the original cost of $3.5 billion due to the increase in prices of key inputs such as steel, cost of shipping as well as the cost of loans.
“Fully loaded, we are looking at a cost of $5 billion,” says John Bosco Habumugisha, the General Manager, National Pipeline Company.
According to Proscovia Nabbanja, the Chief Executive Officer of State-owned Uganda National Oil Company (Unoc), the shareholders are expecting financing offers from a number of Export Credit Agencies (ECAs) from Europe and China.
“The financial closure is not yet achieved, we are hoping to reach it latest mid this year,” she told journalists during a press conference after the FID announcement on February 1.
It is not clear at this stage if the ECAs will offer direct lending or act as intermediaries for the loans, but industry sources indicate that once European, American and Australian banks walked away from Eacop, China was “the only realistic option”.
Eacop is to be financed 60-40 percent split between debt and equity; this means its shareholders will raise $2 billion between them while the remainder is raised through loans from banks and other international lenders.
Eacop shareholders are TotalEnergies (62 percent), Unoc (15 percent), Tanzania Petroleum Development Company or TPDC (15 percent) and China National Offshore Oil Corporation or Cnooc (8 percent).
Environmentalists in Uganda, Kenya, Tanzania, Europe and the United States, have criticised the project and petitioned targeted banks not to finance the pipeline, saying it is harmful to the sensitive biodiversity of the Albertine region and other natural resources along the route.
When completed in 2025, Eacop will be is the world’s longest heated pipeline, and activists say it will generate 34 million tonnes of carbon dioxide and compromises climate goals.