The East African Crude Oil Pipeline (EACOP) project has encountered a significant obstacle as Chinese financiers, Exim Bank and Sinosure, have failed to disburse the agreed-upon loans, totalling $3 billion.
This delay has resulted in a substantial financing gap, putting the project’s timeline and viability at risk.
“The delay in securing the Chinese loans has put us in a difficult position,” said a senior official at the Uganda National Oil Company (UNOC). “We are working tirelessly to finalize the agreements, but the delay has already impacted the project’s progress.”
Despite a year of negotiations, the loan agreements remain un finalized, leaving the project’s shareholders, including TotalEnergies, UNOC, Tanzania Petroleum Development Corporation, and CNOOC, in a precarious situation. The project’s physical works, currently at 33% completion, are now under threat due to the lack of funds.
“This project is crucial for the region’s economic growth, and we cannot afford to delay it further,” said a spokesperson for TotalEnergies. “We urge the Chinese financiers to expedite the loan disbursement to avoid any further setbacks.”
UNOC has stepped in to mitigate the crisis, injecting $35.38 million into the project this month. However, this amount is merely a fraction of the required funds, highlighting the urgency of the situation.
“We are doing everything possible to keep the project on track, but we need the Chinese loans to materialize soon,” said the UNOC official.
The EACOP project, a 1,443-kilometer pipeline aimed at transporting crude oil from Uganda’s Lake Albert to Tanzania’s port of Tanga, is a critical infrastructure project for the region. The delay in securing the Chinese loans has raised concerns about the project’s future and the potential impact on the regional economy.
As the project faces this critical juncture, the delay in securing the Chinese loans has put the spotlight on the challenges of international financing for large-scale infrastructure projects in Africa.
“This incident highlights the risks and uncertainties associated with relying on international financing for critical projects,” said Dr. Elsie Sifa, an energy expert at the African Energy Institute. “Africa needs to develop its own financing mechanisms to reduce dependence on external funding.”
