The African Export Bank (Afreximbank) and the African Petroleum Producers Organisation (APPO) have committed to the establishment of an African energy bank.
The two African institutions have resolved to work together to find an Africa-led solution to the challenge posed to the African oil and gas industry and an orderly energy transition in Africa by the withdrawal of funding by its traditional financiers.
The two institutions have committed to taking necessary actions to promote a sustainable and balanced solution to the challenge of financing the oil and gas industry in Africa during the energy transition, through, among others, the establishment of an African Energy Transition Bank dedicated to supporting an Africa-led energy transition strategy that is consistent with the goal of preserving the environment and livelihoods.
The decision followed pressure from Nigeria and other oil-producing African countries to float a bank that will cater to the energy needs of the continent as a result of declining global investment in the oil and gas sector.
Recently, the Minister of State, Petroleum Resources, Chief Timipre Sylva, while marshalling reasons for the urgent need to establish the bank, stated that it will help boost business activities in the sector on the continent. Sylva said since western nations were scaling down funding for hydrocarbon exploration across the world and focusing on renewable energies, setting up an African energy bank remains a viable way to neutralise the threat.
According to the minister, the call for the establishment of the bank is heightened by Nigeria passing the Petroleum Industry Act (PIA), stressing that the Act will open up the oil and gas sector for huge investments, going forward.
“If we insist on the exploration of our oil and gas reserves when the world is cutting down on investments in the sector, we must set a financial institution, an African energy bank, to develop the oil and gas sector,” he insisted.
But during the signing ceremony at the ongoing 8th African Petroleum Congress and Exhibition tagged “CAPE VIII” in Luanda, Angola, the parties explained that the deal was aimed at scaling up private sector investment in African oil and gas projects.
The bank is expected to provide critical financing for new and existing oil and gas projects as well as energy developments across the entire value chain.
Rene Awambeng, Director and Global Head of Client Relations at Afreximbank, signed on behalf of the bank while Nigeria’s Omar Farouk, Secretary General of APPO, appended his signature on behalf of African oil producers.
While the developed world calls for the end of fossil fuels due to climate change, Africa continues to face the crisis of energy poverty.
According to available data, over 600 million lack access to electricity and 900 million lack access to clean cooking solutions, leading to stakeholders calling for the rapid expansion of the oil and gas sector. Despite these calls, global investors are shying away from hydrocarbons, leaving the continent without the investment it needs if it is to capitalise on its resources.
Source: ESI Africa (Published May 19, 2022)