Stanbic Bank Uganda said it expected the debt financing for Uganda’s crude oil pipeline to reach financial close in June 2019 after months of talks with lenders across Europe, Japan and China.
Patrick Mweheire, the bank’s chief executive, said the discussions had gone well and that the project had drawn strong interest from potential financiers. “People like the project... the economics of the pipeline make a lot of sense. I think we are looking at some time in June next year for financial close,” he said in an interview.
Stanbic Uganda, a subsidiary of South Africa’s Standard Bank Group, is serving as joint arranger and adviser alongside Japan’s Sumitomo Mitsui Banking Corp. The bank is leading the debt portion of the financing for the East African pipeline project, which is valued at USD3.5 billion in total. The remaining funds are expected to come from shareholders in equity.
Uganda and Tanzania signed an agreement in May 2018 to jointly develop the pipeline, which has been described as the longest electrically heated crude oil pipeline in the world. The line will stretch 1,445 km from the oilfields in western Uganda to Tanzania’s Indian Ocean port of Tanga, using a 24-inch diameter pipe.
Uganda discovered crude oil reserves estimated at 6.5 billion barrels more than a decade ago. The fields are owned by France’s Total, China’s CNOOC and Britain’s Tullow.
The Ugandan government has repeatedly pushed for production to begin in 2020, although Total and CNOOC, the joint developers, have said output is more likely to start in 2021. The pipeline financing is therefore a key step in the wider oil development timeline.
Mweheire also said Stanbic, Uganda’s largest lender, planned to create a fintech unit that would be launched in January 2019. He said the unit would help the bank build relationships with other fintech firms and potentially invest in companies offering useful products.
He added that Stanbic was already in talks with Africa e-commerce company Jumia over a possible partnership, though he did not give further details.
The bank’s comments came as it continued to position itself around major infrastructure finance and new digital business opportunities in Uganda and the wider region.
