South Africa’s Standard Bank, the largest African lender by assets, will fund the controversial Uganda-Tanzania oil pipeline, Bloomberg reported on Thursday.
Work on the 1,445km pipeline to connect Uganda’s oil fields on the shores of Lake Albert to the Tanzanian port of Tanga has faced funding hitches as environmentalists lobby to stop the project, arguing that it will displace thousands of people and destroy animals’ habitat.
French oil major TotalEnergies owns a majority stake in the project while Uganda, Tanzania, and China National Offshore Oil Corporation hold minority shares.
“We have done our governance process internally, the environmental and social due diligence, which took a long time,” Bloomberg quoted Nonkululeko Nyembezi, Standard Bank chair.
Potential lenders and insurance firms have opted out of the project, citing environmental concerns raised by activists that have delayed the East African nation’s oil export dream for four years. Chinese lenders who warmed up to the project after Western banks recoiled have held back their commitment, questioning its economic viability.
In 2022, the European Parliament passed a resolution opposing the project, complicating TotalEnergies’ efforts to raise capital among European lenders.
Early this year, over 20 insurers declined to insure the project after pressure from activists. SA Meacock, SiriusPoint, Enstart Group, Blenheim, and Riverstone International ruled out being part of the project.
Nyembezi told Bloomberg that the bank will decide in the coming months. “We have all the lenders. There is a complete commitment on the part of the sponsors of the oil projects to get it done,” Nyembezi said.
Landlocked Uganda discovered oil 17 years ago but its commercial production has faced delays due to the lack of an export pipeline through the neighbouring countries to the Indian Ocean. Uganda and Tanzania are targeting to complete the project by December 2025.
