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China invites Uganda for talks on USD5b crude oil pipeline project

Uganda’s President Yoweri Museveni received a letter from President Xi Jinping of China expressing his support for the EACOP project.

Uganda’s presidency confirmed on Friday 5, April 2024 that China has extended an invitation to Uganda’s Energy minister to visit Beijing for discussions on the country’s $5 billion crude oil pipeline project.

This development offers hope for progress in Uganda’s efforts to secure Chinese financing for the pipeline, crucial for kickstarting crude production from oilfields discovered back in 2006.

The potential involvement of Chinese funding gains significance as Western banks have refrained from financing the project following pressure from environmentalists, citing concerns over its impact on global carbon emissions.

The development could signal a possible breakthrough in Uganda’s efforts to woo Chinese financiers to fund the pipeline, which the country requires to start crude production from oilfields that were discovered in 2006.

China’s Special Envoy for the Horn of Africa Affairs Xue Bing delivered a message to President Yoweri Museveni on Thursday, in which Chinese President Xi Jinping expressed his support for the 1,445-km (898-mile) pipeline, Museveni’s office said.

“Chinese financial institutions are open to discussions on the project and extended an invitation to Hon. Ruth Nankabirwa, the Minister of Energy and Mineral Development, to visit China for further discussions,” Mr Museveni’s office said.

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Museveni urged the Chinese government to encourage their companies to invest in value addition at the source and import finished products from Africa to reduce dependency on exporting raw materials.

The East African Crude Oil Pipeline (Eacop) will run from the oilfields in landlocked Uganda’s west and terminate at Tanga port on Tanzania’s Indian Ocean coast.

“I am in full support of Eacop. I believe that it will enhance socio-economic development for the region,” Museveni’s office quoted Xi as saying in his letter.

Discussions had already been going on between Uganda and Chinese export credit agency SINOSURE for possible funding but multiple deadlines for the conclusion of those talks had passed without a resolution.

The construction of the pipeline, which will be electrically heated to keep the oil flowing, has started with the transportation of pipes and other materials to sites in Tanzania and Uganda.

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Additionally, a thermal insulation plant, essential for insulating the pipes before installation, commenced operations in late March, marking progress in the preparatory phases of the crude oil pipeline project.

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