Amid a struggling economy, Standard Bank Group’s Ugandan unit has been tasked to raise $3 billion (€2.56bn) for a crude pipeline by the second half of next year in preparation to start oil production by 2020.
President Museveni’s government has appointed Stanbic Bank Uganda and Japan’s Sumitomo Mitsui Financial Group (SMFG) to help it raise over 12.6 trillion Shillings ($3.55 Billion)) required for financing the 1,445km pipeline by the second half of next year. The pipeline will connect Hoima oilfields to the port of Tanga in Tanzania.
Museveni and his Counterpart John Magufuli commissioned the construction of the pipeline earlier this month. However, A report carried earlier by Irish news indicates that the project will be financed through debt financing from the international markets due to shortage of funding in Uganda and Tanzania.
Stanbic Bank’s Chief Executive Officer, Patrick Mweheire said in an interview that the bank is positive about the success of the joint financial advisory role on the pipeline funding.
“A lot of activities are going on, a lot of tenders are being made” and expectations are that the final investment decision for the project will be made in the first quarter of next year, Mr Mweheire told Irish Times.
He adds that the companies are considering several options for raising the required funding.
Mweheire says the Standard Bank Group has had vast experience with oil and gas developments in other African countries and hopes to transfer that to Uganda.
But the bank has recorded Shs95.4bn net profit in its half year results for 2017, down from Shs107.2bn recorded in the year ended June 2016. This represents a decline of 11%.
Mweheire attributed the bank’s performance to the continued drop in interest rates plus slower than expected credit uptake.
“This plus slow economic activity and the flat currency all led to a drop in the profit after tax,” he said, adding that demand for credit across the sector has remained subdued.
The bank also registered a 6% decrease in total income to Shs314bn in June 2017, down from Shs334bn in June 2016.
