#EACOP project leads now forced to self-finance after banks reject the controversial project
A new briefing by BankTrack reveals that TotalEnergies, the China National Oil Company (CNOOC), and the governments of Uganda and Tanzania (through their national oil companies) will now have to finance nearly 90% of the controversial East African Crude Oil Pipeline (EACOP). This shift follows their failure to attract funding under the original 60:40 equity-to-debt structure.
Years of sustained campaigning by the StopEACOP coalition have exposed concerns about EACOP's environmental, social, and financial risks, including the displacement of more than 100,000 people, a direct threat to internationally protected areas like Ramsar sites and key biodiversity areas, and the potential for worsening the climate crisis. This has led more than 40 banks and 30 insurance firms to distance themselves from EACOP.
To date, only five banks, including South Africa's Standard Bank, Stanbic Bank Uganda, KCB Uganda, Saudi Arabia's Islamic Corporation for the Development of the Private Sector, and Afrexim Bank, are known to be involved.
According to this financial risk brief, EACOP project leaders, led by TotalEnergies, have moved from committing US$1.4 billion to now having to spend US$4.8 billion - nearly three times the original amount. This increase is also due to the total project cost rising significantly from the original US$3.5 billion to the current US$5.6 billion, mostly because of delays.
Consequently, while the report reveals that the project proponents, including Uganda and Tanzania, are assuming a greater proportion of the risk for the controversial project, it is immediately apparent that, unlike TotalEnergies and CNOOC, which will spread this risk through their shareholders, the two countries, already burdened by debt, will have to borrow more, further straining public finances and placing the cost squarely on taxpayers who have already paid dearly for this project.
This should make us pause. The financial strain, deepening national debt, and escalating risks confirm what EACOP-affected communities and climate and environmental activists have been saying all along: EACOP is not only a climate and human rights disaster but also makes no economic sense.
As a coalition, we are therefore calling upon the shareholders and bondholders of TotalEnergies and CNOOC to act with integrity and foresight, in line with their responsibilities under the UNGPs and the OECD Guidelines, to avoid contributing to severe human rights and environmental impacts associated with the operations of their portfolio companies. You can read the full statement here.
👉 Read the full StopEACOP statement here
👉 Read and or download BankTrack’s financial risk brief here
