China Offers Potential Funding for Uganda’s $5Bn Crude Oil Pipeline

Summary:

• China has invited Uganda’s Energy Minister to discuss a $5 billion crude oil pipeline in Beijing, potentially signaling Chinese funding for the project. This comes after Western banks declined due to environmental concerns. President Xi Jinping expressed support for the pipeline, which aims to boost socio-economic development in the region. Construction has begun despite ongoing funding discussions.

Uganda’s presidency announced on Friday that China has extended an invitation to Uganda’s Energy Minister to discuss the nation’s $5 billion crude oil pipeline in Beijing.

This development holds promise for Uganda’s endeavor to secure Chinese financing for the pipeline, crucial for commencing crude production from oilfields discovered in 2006. With Western banks refraining from funding due to environmental concerns raised by activists, Chinese support emerges as a pivotal option.

Chinese President Xi Jinping conveyed his backing for the 1,445-km (898-mile) pipeline through a message delivered by China’s Special Envoy for the Horn of Africa Affairs, Xue Bing, during a meeting with President Yoweri Museveni on Thursday.

Expressing openness to dialogue, Chinese financial institutions have invited Hon. Ruth Nankabirwa, the Minister of Energy and Mineral Development, to China for further discussions, as confirmed by Museveni’s office.

The East African Crude Oil Pipeline (Eacop) will span from Uganda’s west, where the oilfields are located, to Tanga port on Tanzania’s Indian Ocean coast. President Xi emphasized the socio-economic benefits of the project, echoing his support for Eacop.

While discussions with China’s export credit agency SINOSURE for potential funding had been ongoing, deadlines passed without resolution. Nonetheless, construction activities have commenced, with transportation of materials and the establishment of a thermal insulation plant underway to facilitate the pipeline’s construction and operation.