The Brics Summit in South Africa became the stage for a political discourse concerning the financing of East Africa’s oil pipeline (Eacop). Environmentalists utilized the event to once again voice opposition to the project. While authorities view it as an economic enhancer, critics argue that it poses a threat to the ecosystem.
During the Summit, Chinese officials faced criticism for their support of fossil fuel ventures in Africa. On the sidelines of the event in South Africa, Chinese representatives encountered strong criticism for their backing of the contentious East African Crude Oil Pipeline (Eacop) that extends from Uganda to Tanzania.
Protesters mobilized outside the Sandton venue to express their grievances against China’s involvement. They urged Beijing to consider local and global concerns and shift its investment focus towards a sustainable renewable future, instead of endorsing fossil fuel initiatives that contribute to climate change.
“China is rapidly upscaling renewable energy projects at home but is funding #fossilfuels in Africa. This is what we’re against. We need the #Brics to adopt a new model and a new approach-based ion sustainability and transparency,” the #StopEacop campaign tweeted on Thursday.
The activists claimed that Beijing’s involvement in fossil fuel projects in Africa is what they view as a friendship of resource-driven, exploitative, and destructive endeavors. Zaki Mamdoo, Coordinator of 350.org’s StopEacop campaign, compared China’s actions to colonialism.
“We cannot accept that China and other rising global powers are pursuing the same colonial extraction & exploitation of the last 400yrs. We demand a stop to all new fossil fuel projects in Africa & a just & equitable partnership model of collective benefit,” he tweeted.
Among the international non-governmental organizations actively opposing the $5 billion East African Crude Oil Pipeline (Eacop), which is poised to claim the distinction of being the world’s lengthiest heated pipeline, is 350.org. This pipeline is deemed a climate catastrophe that stands to undermine the objectives of the Paris Agreement, which aims to reduce greenhouse gas emissions and constrain temperature increases to 1.5 °C on a global scale.
The primary investor in the pipeline project is TotalEnergies, holding a 62 percent stake. Alongside, the Uganda National Oil Company and Tanzania Petroleum Development Corporation each possess a 15 percent share, while the China National Offshore Oil Corporation holds an 8 percent stake.
“However, with risk averse western lenders reducing their exposure to environmentally projects, including oil and gas projects, the project’s shareholders have increasingly looked to China as the source of financing to close the $1.8 billion funding shortfall,” Uganda’s Energy Minister Ruth Nankabirwa said in May.
Kampala’s government officials have pointed to the China Exim Bank and the Industrial and Commercial Bank of China (ICBC) as potential funding sources, sparking a shift in activist efforts to target Beijing within the context of the BRICS. This action accuses China of leveraging its financial power to maintain Africa’s reliance on its loans.
Handling the Eacop financing, ICBC, along with South Africa-based pan-African institution Standard Bank (including its subsidiary Stanbic Bank in Uganda), and Japan’s Sumitomo Mitsui Banking Corporation (SMBC), act as transaction advisors.
Officials in Kampala have indicated that a major share of the funding for the 1443km pipeline’s construction will originate from Chinese lenders. In addition, banks from Africa and the Middle East have also participated in financing a portion of the project’s debt.
Eacop’s financial structure comprises 60 percent debt and 40 percent equity, with the debt estimated to range between $2 to $3 billion, as outlined in the 2023 meeting minutes of TotalEnergies shareholders.
Protests emerged outside the Johannesburg headquarters of Standard Bank in June, with activists criticizing the institution for its involvement in the contentious project. Unconfirmed reports suggested that ICBC transferred approximately $1-2 billion to Standard Bank, a shareholder in ICBC, to bolster the financier’s capacity for lending to Eacop.
Kenny Fihla, the Chief Executive of Standard Bank, previously emphasized that the bank might possess limited influence over the decision-making process regarding the project’s continuation.
“In our view the involvement, or lack thereof of Standard Bank is material to the outcome of their [activists] own cause. And we have no problem with that,” he told SABC in June.