EACOP Financing On Track-UNOC

The East African Crude Oil Pipeline (EACOP) project could secure the needed financing ahead of planned construction later in the year.

Uganda National Oil Company (UNOC) Chief Commercial Officer, Gilbert Kamuntu has revealed that efforts to raise funding for EACOP are proceeding well. The Uganda National Oil Company (UNOC) is one of the shareholders in EACOP with 15%. The Joint Venture Partners (Total Holdings International B.V. has 62% shareholding, CNOOC Uganda Limited with 8%, and the Tanzania Petroleum Development Corporation (TPDC)has 15%.

While a Final Investment Decision was taken by the Joint Venture Partners at the beginning of February 2022, the financing is yet to be secured for the development of the pipeline that will export Uganda’s crude oil to the international market. The efforts to secure funding for EACOP from international banks have been frustrated by anti-fossil fuel campaigners claiming that the project will adversely affect the environment and lead to mass displacements of project-affected persons.

But according to Kamuntu, the picture for financing the project look clearer than it was some months back.   “In summary, there are three tranches of funding. There is international liquidity, that is the European and mid-Eastern banks, there is African liquidity, and there is African liquidity,” said Kamuntu   He said several Banks that have expressed interest and commitment to the project.  

“Such as Afriexim Bank. I believe you saw some announcements recently. And of course, there is Chinese liquidity.  I can tell you that we are about 60 to 70% complete with financing,” said Kamuntu.

Afriexim Bank in October 2023 pledged to provide about $200 million towards the construction of the 1,443km heated crude oil pipeline. Uganda will host 296 km of the pipeline.

The construction of the pipeline is expected to cost between $ 4.2-$5 billion. So according to Kamuntu, the project is likely to take off when the financing is secured.   “It is true that we have as a project had to deal with what is considered unreasonable from climate activism but from a technical and commercial perspective, we believe that we are proceeding well and that will be concluded sometime this year,” Kamuntu added.

The EACOP project has reportedly been subject to a number of third-party Independent audits.    “There have been technical audits, and environmental, audits. All the commercial agreements have gone through legal audits. The project has achieved success, there are no red flags.  It is compliant with equator principles” Kamuntu told journalists in Kampala. The Equator Principles are a set of guidelines developed by private-sector financial institutions for managing environmental and social risks related to financing large-scale projects like oil developments.   

Kamuntu declined to reveal how much in terms of financing and what has informed a turn-around given the pressure the Stop EACOP campaigners had mounted on some of the local, regional and international Bank. 

URN could not reach the Japanese Sumitomo Mitsui Banking Corporation (SMBC) the financial advisor to Total Energies (Total) — the lead developer of the project about the alleged progress.   The Energy and Mineral Development Minister, Ruth Nankabirwa told journalists that EACOP limited has intensified activities in Uganda and Tanzania since the FID was taken in February last year.    

Nankabirwa revealed that she was in the final stage of awarding EACOP Limited a construction license following the approval of the license.

“The review and evaluation of the applications in Uganda have been completed, and Cabinet provided approval to issue the license, and I am issuing the license this week,” said Nankabirwa 

 According to the Minister, early Civil works for the EACOP project have commenced on the Tanzanian section, and the civil works on the Ugandan side are expected to start this year.  

Petroleum Authority’s Legal Director, Ali Ssekatawa told Journalist at the Energy Ministry in Kampala that a number of activities were ongoing in Tanzania which will host the largest section of the pipeline.

“There are early works which are being done in Tanzania. Like fencing top soil relocation and so on. On the facilities in Tanzania. It is also true from what EACOP has prepared because the pipeline is from Tanzania, all the logistical requirements will be through Tanzania and then through Mutukula.” Said Ssekatawa 

He confirmed there has been some progress in the area of Engineering m, construction, and Management (EPCM) being undertaken by WorleyParsons or Worley Limited UK.  

The Engineering, Procurement, and Construction Management (EPCM) contract was awarded to WorleyParsons (now Worley Limited) UK, working with Newplan Engineers and Infra Consulting Services from Uganda, together with Norplan Tanzania and Inter Consult Ltd from Tanzania.    

“That activity is continuing and as of December, it was at 36%. Land acquisition is progressing so well. Because in Tanzania they are approaching 90% and in Uganda, we are at about 60%. And the major reason is for the last so many months, Mubende area was out of reach because of Ebola”