The Uganda-Tanzania crude oil pipeline project is nearing its final funding decision, thanks to the resolution of a longstanding issue between Tanzania and Chinese financiers.
Although the issue between Tanzania and Chinese funders was unrelated to the East Africa Crude Oil Pipeline (EACOP), Kenny Fihla, CEO of Standard Bank Group’s commercial and investment banking division, highlighted it as a major hurdle in reaching the final investment decision.
Fihla clarified that “the delay was due to the historical dispute between the Tanzanian government and some Chinese funders, which had no direct connection to the project but needed resolution to move forward. We’ve been informed that an agreement has been reached.”
Standard Bank’s commitment to invest up to $100 million hinges on an agreement between project developer TotalEnergies SE, China’s CNOOC Ltd., and the governments of Uganda and Tanzania regarding the project’s financing structure.
The bank is also awaiting the completion of an environmental and social impact assessment study, according to Bloomberg.
“The data collection and response are nearing completion. If we are satisfied with that, we will proceed. If not, we may require further studies or decline to participate,” Fihla noted.
The construction of the crude oil pipeline has sparked a heated debate regarding its impact on economic development and environmental protection in a region highly vulnerable to climate change.
Environmental groups have raised concerns about potential harm to the habitats of endangered wildlife and the displacement of over 118,000 people. As a result, approximately 260 civil society organizations, including Standard Bank, have been urged not to support the project.
Fihla emphasized that “Standard Bank’s funding is not the sole determinant. We will fund it if we decide it’s the right step for Uganda and Tanzania’s economies and if we believe all issues have been properly addressed.”
The pipeline, spanning 1,443 kilometers (897 miles), is set to begin oil transportation in 2025, with a peak capacity of 246,000 barrels per day, according to the project’s official website.
TotalEnergies holds the majority 62% stake in this ambitious project, which is slated to become the world’s longest-heated pipeline upon completion.
The state-owned Tanzania Petroleum Development Corp. and Uganda National Oil Co. each possess a 15% stake, with the remaining ownership attributed to CNOOC. According to UNOC, the project’s financing structure will follow a 40:60 equity-debt ratio.
