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Stanbic sees June 2019 close for $2.5 bln debt deal for Uganda’s oil pipeline

Stanbic Bank Uganda, lead arranger for the East African nation’s $2.5 billion debt for a crude oil pipeline, expects the deal to conclude in June next year, its chief executive said on Wednesday.

Uganda and Tanzania signed an agreement in May last year to jointly develop a pipeline that has been described as the longest electrically heated crude oil pipeline in the world.

Stanbic Uganda, a unit of South Africa’s Standard Bank Group, secured the role of joint arranger and adviser together with Japan’s Sumitomo Mitsui Banking Corp.

The pipeline will cost a total of $3.5 billion, with the balance coming from shareholders in equity.

Patrick Mweheire, Stanbic’s CEO, said it had engaged in talks with other lenders in Europe, Japan and China and that “they have all been extremely positive”.

“People like the project … the economics of the pipeline make a lot of sense. I think we are looking at some time in June next year for financial close,” he said in an interview.

Covering a distance of 1,445 km, the 24-inch diameter pipeline will start near the oilfields in western Uganda and terminate at Tanzania’s Indian Ocean seaport of Tanga.

Landlocked Uganda discovered crude oil reserves estimated at 6.5 billion barrels more than a decade ago.

France’s Total, owns the fields alongside China’s CNOOC and Britain’s Tullow.

Uganda’s government hopes production will start in 2020 after repeated delays but Total and CNOOC, joint developers of the fields, have said output is likely to start a year later. Mweheire said Stanbic, which is Uganda’s largest lender, would create a unit to chase deals in financial technology, also known as fintech, to be unveiled in January. “The fintech (unit) … will allow us to have relationships with other fintechs, potentially buy into some of those fintechs that bring some value propositions that we need,” he said.

Stanbic, he said, was already in talks to with Africa e-commerce firm Jumia for a potential partnership, he said without offering more details.

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