Written By: By Jemosop Faith, Faith specializes in energy conversations in Africa. Breaking down complex policy discussions into accessible, everyday conversations, she is a writer at Africa Digest News backed by 2+ years of focused experience.
Ugandan government has announced that it has secured the necessary funding for the ambitious East African Crude Oil Pipeline (EACOP) project, estimated at approximately $5 billion (UGX 18 trillion). This development comes after facing considerable headwinds, particularly from environmental activists and financing challenges in 2023.
Government officials have expressed confidence that the project is now firmly on track, with substantial progress made in the laying of the 1,443-kilometer pipeline in Tanzania. Approximately 1,100 kilometers of the required piping has already been imported, with installation underway. The government anticipates the first flow of crude oil through the pipeline by mid-2026.
Addressing earlier concerns about financing, government representatives clarified that the bulk of the required funds is now secured. While acknowledging initial challenges in 2023 stemming from environmental pushback, they emphasized that these hurdles have been overcome.
Contrary to public perception, the financing syndicate comprises both local and international banks, including institutions from Asia and China, demonstrating a broad base of financial support for the project.
The EACOP project has faced significant opposition from environmental groups who have raised concerns about its potential impact on biodiversity, displacement of communities, and contribution to climate change.
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The government has maintained that the project adheres to stringent environmental and social protection standards. Adjustments, such as the incorporation of solar-powered heating systems, have been made to enhance the project’s environmental viability.
The government projects substantial economic benefits from the EACOP once operational. It anticipates generating between $2 billion and $2.5 billion annually in government revenue for an estimated 20 years, based on the currently discovered commercial oil reserves.
This revenue, according to government policy, will be ring-fenced for infrastructure development, as outlined in the amended Public Finance Management Act. Officials pointed to the utilization of petroleum fund revenues in supporting infrastructure projects like the Karuma Hydropower plant as evidence of this commitment.
The project has already had a notable impact on local content and employment. Approximately $7 billion has been invested in the project to date, with a significant portion benefiting local contractors.
Over 90% of the employees in the oil and gas companies operating in the field are Ugandan nationals. The project also supports local farmers through the supply of wood and other operational requirements, highlighting a positive ripple effect on the broader economy even before the commencement of oil production.
In response to concerns about transparency and potential for the “resource curse,” the government emphasized its commitment to open communication and stakeholder engagement.
Uganda’s National Oil and Gas Policy outlines ten objectives, including a critical focus on stakeholder management and engagement. The government highlighted its ongoing partnership with civil society organizations, through which it aims to provide updates on project progress, challenges, risks, and mitigation strategies. Engagement efforts also extend to local government levels, with dedicated teams working on the ground.
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Drawing a contrast with countries like Norway, where public access to information regarding oil revenues is high, the government assured that it is actively working to ensure transparency and public awareness regarding the EACOP project and its benefits for the Ugandan people.
The establishment of a dedicated petroleum fund and the earmarking of revenues for infrastructure are key measures intended to prevent mismanagement and ensure that the oil resources contribute to sustainable national development.
