The Standard Bank Group in Uganda has initiated plans to raise US$3.5 billion to build the 1,445km crude pipeline by the second half of next year, as Uganda prepares to start oil production by the year 2020.
According to Stanbic Bank Uganda boss, Patrick Mweheire, the bank which is part of the Standard Group, has been appointed as a joint financial advisor alongside Japan’s Sumitomo Mitsui Banking.
Mweheire said the companies would consider borrowing from banks or approach export credit agencies among other funding options for the project that is estimated to cost US$3.5 billion .
“A lot of activities are going on, a lot of tenders are being madeand expectations are that the final investment decision for the project will be made in the first quarter of next year, Mr Mweheire said.
The pipeline will push crude oil from the fields in Hoima district to the west to the port of Tanga in Tanzania.
President Yoweri Museveni and his Tanzanian counterpart John Magufuli commissioned the construction of the pipeline earlier this month in Tanzania, with the two leaders saying it would bring in the much-needed oil revenue and provide over 10,000 jobs.
There is an estimated was 6.5 billion barrels of oil in place, but recoverable oil is estimated to be between 1.8 and 2.2 billion barrels.
Oil companies, Tullow Oil, Total and Cnooc are jointly developing Uganda’s oil finds. Tullow, however, is no longer an operator having sold its stakes to Total and Cnooc, the much bigger players in the industry.
At full production, the fields are expected to produce up to 230,000 barrels a day. Estimates show a barrel will cost US$25.