Uganda seeks Chinese funding for oil pipeline project

Uganda is in the final stages of negotiations with Chinese financiers to help fund a controversial pipeline project after some Western partners pulled out, a senior official said 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 AFP.

"We should be concluding the arrangements with the Chinese financiers this coming month (October)," she added.

French energy giant TotalEnergies is leading a multi-billion dollar project to develop Ugandan oilfields and ship the crude through a 1,445-kilometre (900-mile) pipeline to a port in Tanzania.

But the scheme has come under fire from human rights groups and environmental campaigners who say it will harm fragile ecosystems and the livelihoods of tens of thousands of local people.

The government has vowed to plough ahead despite the opposition, and TotalEnergies says those displaced by the project have been fairly compensated and measures have been taken to protect 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 said Uganda was speaking to two Chinese financiers, the Export-Import Bank of China and Sinosure.

TotalEnergies has a 62 percent stake in the pipeline, with Ugandan and Tanzanian state-owned oil companies holding 15 percent each and China National Offshore Oil Corporation eight percent.

The pipeline is part of a $10 billion project to develop oilfields in Lake Albert in northwestern Uganda and export the crude to international markets via the Indian Ocean port of Tanga in Tanzania.

The lake lies atop an estimated 6.5 billion barrels of crude, of which about 1.4 billion barrels are currently considered recoverable.

Uganda's first oil is expected to flow in 2025 — almost two decades after the reserves were discovered — and the project has been hailed by President Yoweri Museveni as an economic boon for the landlocked country where many live in poverty.