Table of Contents
Key Points
- Africa’s largest lender led a consortium to arrange debt financing for Uganda and Tanzania’s $5 billion crude oil pipeline
- Despite concerns over ecological impact, Standard Bank and partners cite extensive risk assessments before finalizing the deal.
- Supporters say EACOP will boost Uganda’s oil sector and jobs, while critics warn of carbon emissions and habitat disruption.
Africa’s largest lender by assets, Standard Bank, led by South African banker Sim Tshabalala, has led a consortium of five African and Middle Eastern banks to secure the first tranche of debt financing for the $5 billion East African Crude Oil Pipeline (EACOP). This is a step forward for Uganda and Tanzania’s oil ambitions, despite ongoing opposition from environmental groups.
The financing, arranged with Standard Bank as the transactional advisor, includes its Ugandan subsidiary, Stanbic Bank, along with Egypt’s Afreximbank, Kenya’s KCB Bank Uganda, and Saudi Arabia’s Islamic Corporation for the Development of the Private Sector (ICD). After years of negotiations and due diligence, this marks a cautious return of investor confidence in the long-delayed project.
A contentious but strategic investment
EACOP, a 1,443-kilometer pipeline designed to transport Uganda’s waxy crude oil to Tanzania’s Tanga Port, has faced pushback from environmental activists concerned about its impact on ecosystems and communities along the route. Standard Bank and its partners, however, maintain that thorough environmental and social assessments were conducted before finalizing the deal.
Since the Final Investment Decision (FID) in 2022, EACOP has relied on equity financing to develop key infrastructure, including pipeline coating plants in Tanzania and a jetty at Tanga Port. Standard Bank, which has been advising on the project since 2017, doubled its commitment in 2023, injecting $120 million despite pressure from anti-fossil fuel groups. While the bank initially expressed concerns over environmental risks, it proceeded after extensive reviews and risk assessments.
Balancing economic growth and environmental responsibility
Supporters say EACOP will open up Uganda’s oil reserves, create jobs, and strengthen regional economies. Critics argue it poses long-term environmental risks, from carbon emissions to the displacement of local communities. The pipeline runs through eco-sensitive areas like Murchison Falls National Park, home to endangered wildlife, adding to concerns about its impact.
Standard Bank’s role in the deal highlights the growing influence of African financial institutions in shaping the continent’s energy sector. The bank, which operates in 20 countries across Sub-Saharan Africa, recently reported a 3.63 percent increase in headline earnings under CEO Sim Tshabalala, rising from R42.95 billion ($2.34 billion) in 2023 to R44.5 billion ($2.43 billion) in 2024.
