The African Export-Import Bank (Afreximbank) is finalising a US$200 million funding plan that includes letters of credit (L/Cs) and guarantees to support the controversial East African Crude Oil Pipeline (EACOP), according to Denys Denya, the bank's senior executive vice president for finance, administration and banking.

The project to link Uganda's oil fields to Tanzania's Port of Tanga, has faced opposition from environmental campaigners and EU lawmakers, leading banks and insurers to steer clear of and even withdraw their support for the project.

Funding struggles

Funds from the Cairo-based lender specialising in financing trade across Africa will be a boost for EACOP, which is expected to cost US$5 billion, but which has struggled to secure funding.

Already facing a four-year delay in construction, it encountered a major setback last February when 28 insurance companies decided to withdraw from providing coverage. They cited pressure from climate activists and apprehensions regarding environmental and human rights risks as reasons for their decision.

Ticks all the boxes

But Afreximbank remains resolute and maintains that the construction of the 1,443-kilometre (897-mile) pipeline "will improve intra-regional trade which is part of our mandate, so it ticks all the boxes for us - there's really no reason for us not to be supporting this." Denya said.

In addition to its funding for EACOP, Afreximbank has also said it is open to funding the construction of a refinery in Uganda.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.