Released October 18, 2024 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--A coalition of 18 African countries is progressing fundraising to raise the US$5 billion it needs to launch an energy bank to fund future oil and gas projects.
The African Petroleum Producers' Organization (APPO), which includes the continent's major producers like Nigeria, Egypt, Libya, Angola and Algeria, is accelerating plans to build the African Energy Bank (AEB) to fund fossil-fuel based projects. The AEB is hoping to address the funding challenges faced by Africa's oil and gas industry amid the global energy transition by supplying funds for African energy projects, including emerging oil and gas projects. Each of the members has pledged $83 million for a total of almost $1.5 billion, which will be matched by the African Export-Import Bank. The remaining $2 billion is being sought from external institutions, including sovereign wealth funds, private funds and other banks. Resource-rich African countries have found it increasingly difficult in recent years to get funding from Western lending organizations that are under pressure to stop funding oil and gas projects in favor of cleaner energy projects, like renewables. The World Bank stopped lending for fossil-fuel projects including coal and oil in Africa in 2019, as has the European Investment Bank. The other major institutional lender on the ground, the African Development Bank, which has the U.S. as its second-largest shareholder, no longer funds coal mining or oil projects.
Industrial Info is tracking 850 active oil and gas projects in Africa worth more than $86 billion in investment. The majority of those projects are located in Nigeria, Morocco, Libya, South Africa and Algeria. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.
The goal is to have the AEB up and running next year, Haytham El Maayergi, executive vice president of global trade at the African Export-Import Bank, told the The Financial Times. He explained that the funding restrictions from traditional western backers are unfair considering that the region's resources are still largely underdeveloped and its contribution to climate change has been much smaller than other parts of the world. "Africa's context is totally different from what you find elsewhere. "[These] are countries at a development stage where you cannot suddenly move into green [transition] . . . you cannot just say funding is cut and they can't do oil." He also pointed out that energy infrastructure projects have to receive investment. Today, more than 600 million Africans--43% of Africa's population--have no access to electricity. According to a paper last year, Who Finances Energy Projects in Africa? by Carnegie Endowment, the country sits on major resources. The continent uses only 11% of its hydropower potential and 0.01% of its wind potential. It also holds 60% of the world's solar resources according to the IEA and, by 2050, it will hold 11% of the world's gas/liquefied natural gas (LNG) market--second only to the Middle East. The paper found that public and private energy finance to Africa from countries in the Group of Twenty (G20) and multilateral development banks from 2012 to 2021 totaled $346 billion--around $35 billion per year. However, the vast majority of that only went to 10 countries.
Speaking in the African Petroleum Producers' Organization newsletter, APPO Secretary-General Umar Ibrahim said: "There is clearly a need to strike the right balance between the imperatives of climate change mitigation and the need to avoid social upheaval that could result from difficult economic and financial conditions in Africa. By making this choice, Africa is deciding, not to go as a propitiatory victim to the altar of the energy transition, but to take its destiny into its own hands, prioritizing the destiny of the nearly one billion or so Africans who have no access to any form of modern energy. And to put it bluntly, solving the problem of energy financing in Africa, far from being a game, remains a matter of life and death. In Africa, industrialization is our top priority, and this cannot be a reality in a context of quick abandonment of hydrocarbons."
This summer, Abuja, Nigeria, was selected at the headquarters for the AEB. Minister of State Petroleum Resources Heineken Lokpobiri said: "This prestigious honor is a testament to our country's leadership and commitment to the energy sector. I am incredibly proud of this achievement. The African Energy Bank will be a cornerstone for financing and advancing energy projects across Africa, promoting innovation, sustainability and economic growth. It symbolizes our collective efforts to harness and develop our rich energy resources for a brighter, more sustainable future." Lokpobiri estimated that the initial target of $5 billion in funding will grow rapidly to $120 billion in the coming five years.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The African Petroleum Producers' Organization (APPO), which includes the continent's major producers like Nigeria, Egypt, Libya, Angola and Algeria, is accelerating plans to build the African Energy Bank (AEB) to fund fossil-fuel based projects. The AEB is hoping to address the funding challenges faced by Africa's oil and gas industry amid the global energy transition by supplying funds for African energy projects, including emerging oil and gas projects. Each of the members has pledged $83 million for a total of almost $1.5 billion, which will be matched by the African Export-Import Bank. The remaining $2 billion is being sought from external institutions, including sovereign wealth funds, private funds and other banks. Resource-rich African countries have found it increasingly difficult in recent years to get funding from Western lending organizations that are under pressure to stop funding oil and gas projects in favor of cleaner energy projects, like renewables. The World Bank stopped lending for fossil-fuel projects including coal and oil in Africa in 2019, as has the European Investment Bank. The other major institutional lender on the ground, the African Development Bank, which has the U.S. as its second-largest shareholder, no longer funds coal mining or oil projects.
Industrial Info is tracking 850 active oil and gas projects in Africa worth more than $86 billion in investment. The majority of those projects are located in Nigeria, Morocco, Libya, South Africa and Algeria. Subscribers to Industrial Info's Global Market Intelligence (GMI) Project Database can click here for the reports.
The goal is to have the AEB up and running next year, Haytham El Maayergi, executive vice president of global trade at the African Export-Import Bank, told the The Financial Times. He explained that the funding restrictions from traditional western backers are unfair considering that the region's resources are still largely underdeveloped and its contribution to climate change has been much smaller than other parts of the world. "Africa's context is totally different from what you find elsewhere. "[These] are countries at a development stage where you cannot suddenly move into green [transition] . . . you cannot just say funding is cut and they can't do oil." He also pointed out that energy infrastructure projects have to receive investment. Today, more than 600 million Africans--43% of Africa's population--have no access to electricity. According to a paper last year, Who Finances Energy Projects in Africa? by Carnegie Endowment, the country sits on major resources. The continent uses only 11% of its hydropower potential and 0.01% of its wind potential. It also holds 60% of the world's solar resources according to the IEA and, by 2050, it will hold 11% of the world's gas/liquefied natural gas (LNG) market--second only to the Middle East. The paper found that public and private energy finance to Africa from countries in the Group of Twenty (G20) and multilateral development banks from 2012 to 2021 totaled $346 billion--around $35 billion per year. However, the vast majority of that only went to 10 countries.
Speaking in the African Petroleum Producers' Organization newsletter, APPO Secretary-General Umar Ibrahim said: "There is clearly a need to strike the right balance between the imperatives of climate change mitigation and the need to avoid social upheaval that could result from difficult economic and financial conditions in Africa. By making this choice, Africa is deciding, not to go as a propitiatory victim to the altar of the energy transition, but to take its destiny into its own hands, prioritizing the destiny of the nearly one billion or so Africans who have no access to any form of modern energy. And to put it bluntly, solving the problem of energy financing in Africa, far from being a game, remains a matter of life and death. In Africa, industrialization is our top priority, and this cannot be a reality in a context of quick abandonment of hydrocarbons."
This summer, Abuja, Nigeria, was selected at the headquarters for the AEB. Minister of State Petroleum Resources Heineken Lokpobiri said: "This prestigious honor is a testament to our country's leadership and commitment to the energy sector. I am incredibly proud of this achievement. The African Energy Bank will be a cornerstone for financing and advancing energy projects across Africa, promoting innovation, sustainability and economic growth. It symbolizes our collective efforts to harness and develop our rich energy resources for a brighter, more sustainable future." Lokpobiri estimated that the initial target of $5 billion in funding will grow rapidly to $120 billion in the coming five years.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
