The China Exim Bank will reportedly come to the rescue of the East African Crude Oil Pipeline after Standard Chartered Bank withdrew from the project that aims to transport oil from western Uganda to the coast of Tanzania.
Ugandan Energy Minister Ruth Nankabirwa confirmed that the Chinese policy bank, along with “several other Chinese banks”, will finance an unspecified amount of the $1.8 billion needed to build the 1,443-kilometer pipeline, according to a report in the Daily Monitor newspaper.
She also added that “two companies from two African countries [are also] offering money” without providing any additional details.
If what the Minister says is true, then it would mark a major breakthrough for the beleaguered French-led pipeline project that has been the target of intense criticism by European lawmakers and environmental activists.
However, there is also good reason to be sceptical of Nankabirwa’s claim, given the sharp decline in development finance from Chinese creditors for projects in Africa and Beijing’s stated desire to finance more sustainable energy initiatives.
Neither the China Exim Bank nor the Chinese embassy in Kampala have confirmed the claim.
WHY IS THIS IMPORTANT? Chinese creditors were widely seen as the lender of last resort for this troubled project given the success that environmental activists have had in discouraging Western companies from participating in the project.
It also bolsters the increasingly robust partnership between French and Chinese stakeholders to build large infrastructure projects in Africa — with companies from both countries also collaborating to build the massive Port of Lekki in Nigeria.
SUGGESTED READING:
- The East African: Chinese, African lenders to cover $1.8b Eacop funding shortfall by Julius Barigaba
- The Daily Monitor: China, African banks to finance Shs11t Eacop debt by Paurl Murungi
