Uganda is currently in the concluding phases of discussions with Chinese financiers to secure funding for a contentious pipeline project, following the withdrawal of certain Western partners, as stated by a senior official on Wednesday.
“We are having final discussions with our Chinese partners to provide about half of the finances required for the construction of the EACOP (East African Crude Oil Pipeline),” Irene Bateebe, permanent secretary at the energy ministry, told media.
“We should be concluding the arrangements with the Chinese financiers this coming month (October),” she added.
French energy corporation TotalEnergies is spearheading a multi-billion dollar initiative aimed at the development of Ugandan oilfields and the transportation of the crude via a 1,445-kilometer (900-mile) pipeline to a port in Tanzania.
However, the project has faced criticism from human rights organisations and environmental advocates who contend that it will adversely impact delicate ecosystems and the livelihoods of tens of thousands of local residents.
Despite the opposition, the government has remained committed to pushing forward with the project, and TotalEnergies asserts that individuals displaced by the initiative have received equitable compensation, with measures implemented to safeguard the environment.
“This is a critical project for Uganda,” Bateebe said.
“Some of our international partners from Europe were forced to pull out from financing this project and as a country, we sourced for other friendly partners to finance the balance of the financing and we are on course.”
She mentioned that Uganda is in discussions with two Chinese financiers, namely the Export-Import Bank of China and Sinosure.
TotalEnergies possesses a 62 percent share in the pipeline, while the Ugandan and Tanzanian state-owned oil companies each hold a 15 percent stake, and the China National Offshore Oil Corporation retains eight percent.
The pipeline is an integral component of a $10 billion initiative designed to foster the development of oilfields in Lake Albert, located in northwestern Uganda, and facilitate the export of crude to global markets through the Indian Ocean port of Tanga in Tanzania.
The lake is situated above an estimated 6.5 billion barrels of crude oil, with approximately 1.4 billion barrels currently deemed recoverable.
The commencement of Uganda’s initial oil production is anticipated in 2025, nearly two decades after the oil reserves were initially discovered. President Yoweri Museveni has lauded the project as an economic catalyst for the landlocked nation, where a significant portion of the population lives in impoverished conditions.