(Bloomberg) — Standard Bank Group Ltd. Chief Executive Officer Sim Tshabalala said the benefits of an oil pipeline the continent’s biggest lender is funding in East Africa outweigh the environmental risks.
TotalEnergies SE’s $5 billion 1,443-kilometer (897 mile) East African Crude Oil Pipeline being built to transport landlocked crude in Uganda to the coast for export has faced resistance from environmental groups that scrutinized potential lenders. Opponents have included Ugandan activists, European Parliament members and environmental groups.
“Yes, there are environmental costs, but these are being minimized, and the net effect is that the project is worth it, now and into the future, considering all the facts which include that East Africa has a right to economic development and that people need energy, they need income,” Tshabalala said at a conference in Johannesburg on Tuesday.
The bank chief’s position adds to a debate that pits African governments that want to develop their oil and gas resources to boost development against groups in the West, where the fossil fuels are typically exported.
Mechanical work on EACOP is expected to be finished in the first half of next year, the Petroleum Authority of Uganda said in a July post.
Standard Bank in 2021 hired an independent adviser to decide on involvement in the project, announcing three years later that it would go ahead with funding, which Tshabalala said is “below $100 million.”
The project in March secured its first tranche of syndicated financing from lenders including Standard Bank, African Export Import Bank, Stanbic Uganda Ltd., KCB Bank Uganda Ltd. and the Islamic Corporation for the Development of the Private Sector.
TotalEnergies holds a 62% stake in the line, state-owned Tanzania Petroleum Development Corp. and Uganda National Oil Co. each have a 15% interest, with the remainder owned by CNOOC Ltd., according to a website for the project.
“Our focus is unequivocally on driving Africa’s growth,” which means supporting a mix of renewable and transitional projects, Tshabalala said. “We’re completely clear that African countries have a right and a duty to use their fossil fuels to lift themselves out of poverty.”
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