NGOs’ pressure on banks threatens $3.5bn pipeline project financing

NGOs' pressure on banks threatens $3.5bn pipeline project financing

Tanzanian President John Magufuli and Ugandan President Yoweri Museveni stand in front the project board for the construction of the East Africa Crude Oil Pipeline (EACOP) in Mutukula, Uganda, on November 9, 2017. PHOTO | AFP The East African Crude Oil Pipeline (Eacop) project took a new twist on Monday when 263 non-governmental organisations sought to persuade at least 25 banks listed as potential financiers of the $3.5 billion development not to participate, citing environmental and social risks.

The NGOs in their letter to the lenders claimed the project would fuel climate change by transporting oil generating over 34 million tonnes of carbon emissions each year.

Under pressure to stop financing fossil fuels including coal projects, six banks that the pipeline’s lead investors – French oil major Total, China National Offshore Oil Corporation (CNOOC) and the governments of Uganda and Tanzania – target as lenders, have reportedly indicated that they would not take part.

At 1,445 kilometres, the Eacop is slated to become the world’s longest heated crude oil pipeline spanning Uganda and Tanzania, and posing immense threats to local communities, water supplies, and biodiversity in Uganda, Tanzania, Democratic Republic of Congo and Kenya, the organisations said in their letter.

The pipeline will transport crude oil from Hoima district in western Uganda to Chongoleani in Tanga, the northeastern port city in Tanzania.

The letter is addressed to Sim Tshabalala, the CEO of Standard Bank of South Africa, and its Ugandan subsidiary Stanbic Bank Uganda boss Anne Juuko.

Other are Chen Siqing, Chairman and Executive Director, Industrial and Commercial Bank of China (ICBC), and Makoto Takashima, President and CEO, Sumitomo Mitsui Banking Corporation (SMBC).

The three lenders – Standard Bank, ICBC and Japanese’s SMBC – are the financial advisors for the project. The other 22 banks addressed by the organisations have recently financed Total and CNOOC.

Should the banks yield to pressure, this would deal a blow to Uganda’s oil dream which has stuttered for more than a decade.

The letter comes at a time the speculation is high on the imminent signing of the long-awaited final investment decision (FID) oil deal.

In an email interview with The EastAfrican , Ryan Brightwell, a researcher and editor at the Netherlands-based NGO BankTrack, one of the lead petitioners, said that half a dozen banks have indicated that they would not participate in the project.“We’ve been in touch with dozens of banks about this project, and at least six have now indicated to […]

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