The East African Crude Oil Pipeline project has seen a significant increase in cost, rising by 30% to $5 billion.
The project, which aims to transport oil from Uganda to Tanzania, has faced opposition from risk-averse lenders who have withdrawn their support due to environmental concerns.
At least 10 banks have flagged the project as an environmental risk, citing the expected emissions of 34 tonnes of carbon dioxide at peak production annually, which is not in line with their principle of not lending to projects that do not meet the Paris Agreement goals on climate change.
Global insurers and export credit agencies, including French multinational AXA, have also withdrawn their support, with AXA stating that the project is 'not compatible with our climate commitments.'
The project sponsors, however, remain optimistic, stating that they will secure funding for the project, which is the only component holding back Uganda's oil project and its 2025 first oil production target.
According to TotalEnergies, the lead investor in the project, the upstream projects - Tilenga and Kingfisher - are fully funded through equity, to the tune of $6 billion.
Despite the concerns, the project's proponents argue that it will create value for Uganda and Tanzania, with an estimated 10,000 jobs to be created during the 36-month construction phase.
