Standard Bank Group Ltd., has confirmed it will go ahead to finance the East Africa Crude Oil Pipeline (EACOP), a long-time opposed development.
The project, a $5 billion venture led by TotalEnergies SE, aims to connect Uganda’s oil fields to Tanzania’s coastal export facilities.
Despite the economic projection of tapping into Uganda’s oil reserves, discovered 17 years ago, the pipeline has been in a controversial situation for a while now.
Environmental activists have raised alarms over the potential displacement of communities, destruction of wildlife habitats, and escalation of greenhouse gas emissions.
These issues have led to reluctance from potential lenders and insurers, with some opting out of the project after activist pressure and a European Parliament resolution opposing the project.
The pipeline has faced challenges, including increased costs from an initial $4 billion estimate to the current $5 billion. The project has also seen a shift in stakeholder dynamics, with Chinese investors showing initial interest following Western banks’ withdrawal, only to later show reservations about the pipeline’s economic viability.
Nonkululeko Nyembezi, Chairman of Standard Bank, has disclosed that the bank has completed extensive internal governance processes, including environmental and social due diligence. While the full roster of lenders remains undisclosed, Nyembezi’s statements point to a solid backing for the project, which is expected to be finalized by December 2025.
Ugandan President Yoweri Museveni, along with support from China’s Xi Jinping, has been a vocal proponent of the pipeline, emphasizing its prospects to enhance the region’s economy. However, the project is still being opposed, with Human Rights Watch reporting inadequate compensation for displaced residents.
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