Several Chinese lenders and two African banks are expected to cover the $1.8 billion funding deficit of the East African Crude Oil Pipeline (EACOP), Ugandan Energy Minister Ruth Nankabirwa told media.
The minister said that the remaining debt financing requires $1.8 billion in funds, and that two African companies have offered to provide funding.
Meanwhile, Permanent Secretary Ministry of Energy Irene Batebe noted that most of the required funds for the project's debt financing are expected to come from "main Chinese banks," Afriexim Bank, and other African funders.
Reports suggest that China Exim Bank, a long-term lender to Ugandan infrastructure projects, will be among the financiers providing loans for the $5 billion project. The pipeline will transport oil from Uganda's Lake Albert oilfields to the Tanzanian port of Tanga, covering a distance of 1,443 km.
In April this year, the China Petroleum Pipeline Engineering company signed a contract on the construction and supply of the main pipes for EACOP, making it the fourth Chinese firm to tender for contracts for the development of oil fields and export pipelines.
French TotalEnergies is the leading investor in the pipeline project with 62% of the acreage. In their turn, Uganda National Oil Company and Tanzania Petroleum Development Corporation each possess 15% of the shares, while China National Offshore Oil Corporation owns eight percent.
According to reports on the meetings of TotalEnergies' shareholders for 2022, the project is 60% debt and 40% equity financed, with the debt estimated at $2-3 billion.
Earlier, head of the African Energy Chamber N.J. Ayuk stressed that success is guaranteed for EACOP, as "no pipeline project has ever failed due to financing."
Ayuk, a fervent supporter of Africa's exploitation of its minerals, oil, and gas resources for energy transition, contends that the West shouldn't demand that Africa forsake its fossil fuel initiatives in order to decarbonize, as doing so would obstruct industrialization plans and plunge populations into poverty.
"No one should make any apologies for using their resources to get their people out of poverty," he said.