Uganda is seeking a US$130M loan to finance its 15% share of the East African Crude Oil Pipeline (EACOP), as the government seeks to cement its stake in the project owned through the Uganda National Oil Company.
The loan will be directed toward costs that include project design and environmental impact studies, which had previously been funded by International Oil Companies on behalf of the government.
Uganda’s Parliamentary Committee on National Economy will render the final verdict on the request to borrow from the domestic market, an appeal that was previously rejected on the basis of not being conditioned to a final investment decision (FID).
“We are still scrutinizing this loan request and the different agreements before deciding whether to grant authorization to borrow domestically,” said Committee Chair, Syda Bbumba.
For its part, the government has expressed urgency in gaining approval for the loan, which will secure its equity and advance the pipeline project to FID.
“Negotiations for the FID for EACOP are in advanced stages,” said State Minister of Finance for Planning, David Bahati. “The EACOP Bill has been drafted and is under discussion between government and the oil companies before it’s eventually presented to Parliament. Conclusion of these negotiations and the Bill will pave the way for FID and thus enabling construction to start.”
Representing a US$3.5B investment, the 1,445-km pipeline will transport crude oil from Lake Albert in Western Uganda to Tanga, Tanzania for commercial export. Shareholders include Total, China National Offshore Oil Corporation, the Uganda National Oil Company and Tanzania Petroleum Development Corporation.