On Wednesday this week, EACOP Ltd, the company in charge of the construction and future operation of the East African Crude Oil Pipeline (EACOP), announced the closing of the first tranche of external financing for the project after more than three years of mobilizing the funds.
This funding, a company statement read, is provided by a syndicate of financial institutions including regional banks such as African Export Import Bank (Afreximbank), the Standard Bank of South Africa, Stanbic Bank Uganda, KCB Bank Uganda and the Islamic Corporation for the Development of the Private Sector (ICD).
Last month, we were the first to break the story that all the debt (loans) needed for the construction of the EACOP project had been sourced and signed off, according to our reliable sources. It is now clear that the loan, according to the statement, will come in tranches.
While our story pointed to China as the possible source of the financing, the statement notes that the syndicated loan had local and regional banks as participants. The Industrial and Commercial Bank of China owns a 20% stake in Standard Bank of South Africa, which participated in the syndicated loan.
The successful closing of this first tranche of external financing represents a significant milestone for EACOP and its shareholders TotalEnergies (62%), the Uganda National Oil Company Limited-UNOC (15%), the Tanzania Petroleum Development Corporation-TPDC (15%) and CNOOC (8%).
“It also demonstrates the support of financial institutions on this transformative regional infrastructure,” the company statement reads in part.
The acquisition of the loan is a big plus for the construction of the world’s longest underground heated crude oil pipeline. The process to acquire the debt, which started more than three years ago, has faced a number of barriers, none bigger than the criticism from environment protection and climate activists.
Many international financial institutions backed away from the EACOP project after the activists kept highlighting the unfair displacement of people to pave way for the construction of the pipeline; the risk of pristine vegetation being wiped out; and the threat of toxic carbon emissions when the project is commissioned, amongst other concerns.
The activists wrote a series of letters to potential lenders and in some instances protested outside their offices as part of their pressure to block any funds towards the pipeline.
The shareholders of the pipeline have on the other hand always dismissed the activists as simply alarmists, peddling lies; insisting that the project is committed to the highest environment and social standards such as those espoused by the International Finance Corporation (IFC) and the Equator Principles.
“In Uganda and Tanzania, the construction of the EACOP pipeline is progressing well with a continued focus on safety, environmental sustainability, and local community engagement,” the EACOP statement said.
Adding, “The overall project progress exceeded 50% at the end of 2024. More than 8,000 Ugandan and Tanzanian citizens are employed on the project, about 400,000 man-hours of training have been provided so far and $500m spent locally on goods and services.”
The EACOP will have the capacity to transport 246,000 barrels of crude oil per day, on completion.
The insulated and buried 24-inch pipeline is 1,443 km (296 km in Uganda and 1,147 km in Tanzania) long, has six pumping stations, two pressure reduction stations and a marine export terminal in Tanzania (with a 3 MWp solar plant), all along connected to national primarily hydro-based grids for power supply, says the company.
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