China steps in to save Uganda oil pipeline as Western lenders back out over environmental concerns
- A new pipeline is planned to transport crude oil from Uganda’s Lake Albert oilfields to Tanzania’s Indian Ocean coast
- Several major Western banks have pulled out of investing in the project due to pressure from environmental groups
“We are at the tail-end of the discussions [with Chinese lenders] for financial close. We are confident that by the end of October of this year, we will close the debt component and we would have mobilised most of the funding for the project,” Bateebe said on Friday.
Uganda needs about US$5 billion for the pipeline running from Lake Albert’s oilfields to a storage and loading terminal in the Tanzanian port of Tanga. Financing is set at a 60:40 debt-to-equity ratio, meaning US$3 billion will be secured as debt with the remaining US$2 billion to be financed by shareholders through equity contributions.
TotalEnergies controls a 62 per cent interest in the pipeline; the Uganda National Oil Company holds 15 per cent; Tanzania Petroleum Development Corporation has 15 per cent; leaving 8 per cent for Chinese oil giant China National Offshore Oil Corporation (CNOOC).
The 1,443km (896-mile) pipeline would transport crude oil from Uganda’s Lake Albert oilfields in northwest Uganda to Tanga in Tanzania on the Indian Ocean where the oil would then be sold onwards to world markets.
Besides the Chinese lenders, Bateebe said Uganda expects to get some funding from Saudi Arabia’s Islamic Development Bank and some African banks, including the African Export-Import Bank.
Bateebe said initially many Western-backed lenders had expressed interest in financing the pipeline but pulled out due to strong opposition from environmental and human rights groups who have said the oilfields and pipeline threaten the region’s fragile ecosystem and the livelihoods of thousands of people. Further, environmentalists say Uganda is going against the global push for energy transition away from fossil fuels. By Jevans Nyabiage, South China Morning Post