The $4 billion Uganda-Tanzania crude oil pipeline, also known as the East African Crude Oil Pipeline (EACOP), is nearing its final investment decision (FID). This means that the project is close to securing all of the necessary financing and approvals and that construction could begin soon. According to Standard Bank Group Ltd., this crude oil pipeline has cleared a major obstacle that had delayed a final investment decision.
Standard Bank’s decision to invest up to $100 million hinges on an agreement between project developer TotalEnergies SE, China’s CNOOC Ltd., and the governments of Uganda and Tanzania regarding the financing structure, as explained by Fihla.
Moreover, the bank is also awaiting the completion of an environmental and social impact assessment study, said CEO Sim Tshabalala, last week.
The EACOP is a 1,443-kilometer pipeline that will transport crude oil from Uganda's Lake Albert oilfields to the port of Tanga in Tanzania. The pipeline is being developed by a consortium led by TotalEnergies and CNOOC, and it is expected to cost around $4 billion.
The EACOP has been controversial since its inception, with environmental groups and human rights activists raising concerns about its potential impact on sensitive ecosystems and communities along the route. However, the Ugandan and Tanzanian governments have both said that they are committed to the project and that they believe it will bring significant economic benefits to both countries.
The EACOP is expected to have a significant impact on East Africa's economy. Some of the potential benefits include increasing government revenue, creating jobs, increasing investment, and reducing reliance on oil imports.
On government revenue, the Ugandan and Tanzanian governments are expected to earn billions of dollars in tax revenue from the EACOP. This revenue could be used to fund important public services, such as education, healthcare, and infrastructure development.
On job creation, the EACOP is expected to create thousands of jobs during construction and operation. These jobs will provide much-needed income to people in Uganda and Tanzania.
On increased investment, the EACOP is a major investment in East Africa, and it is expected to attract other investors to the region. This could lead to the development of new industries and businesses, and further boost economic growth.
On reduced reliance on oil imports, the EACOP will allow Uganda and Tanzania to export their own crude oil, and this will reduce their reliance on oil imports. This could save the two countries millions of dollars each year.
Overall, the EACOP is expected to have a positive impact on East Africa's economy. However, it is important to mitigate the potential risks associated with the project, such as environmental damage, human rights abuses, and corruption.
The FID for the EACOP is expected to be made in the coming months, with construction likely to begin in early 2024. The pipeline is scheduled to be completed in 2025, and it is expected to start transporting oil in 2026.
The EACOP is a major project for East Africa, and it has the potential to transform the economies of Uganda and Tanzania. However, it is important to ensure that the project is developed in a sustainable and responsible manner, and that the concerns of affected communities are addressed.