By Vivian Ihechu
As clamor for solutions to mitigate the crisis in the African energy sector takes center stage, the African Export-Import Bank, Afreximbank says it is set to launch the African Energy Bank in June 2024.
This is expected to champion energy-related projects for the development of African continent.
The initiative was conceived last year when Afreximbank signed an agreement with the African Petroleum Producers Organization (APPO) according to which both parties will collaborate on the establishment of an African Energy Transition Bank, AEB, in support of an Africa-led energy transition strategy.
The bank made this known during a session on“`Africa’s Energy Transition and Financing’’, at the ongoing Inter-African Trade Fair, IATF 2023 Trade Conference in Cairo, Egypt.
The Director of Client Relations, Afreximbank, Rene Awambeng, stated that the bank had partnered with over 700 banks in Africa and its partners to chart a profitable pathway for the African Energy sector.
“In addition to what the bank is doing, with its partners, the management of the Afreximbank, working on the sidelines with APPO, has decided to create another agency that will be able to engage in financing the Energy African requirement.
“We are in the final stage of getting all the approvals and it is going to be an organisation set off by treaties.
“We will have three classes of shareholders, the first will be the African oil-producing countries, national oil companies and African investors as well as the international investors from all works of life.
“The budgeted share per capital will be $5 million. There will be a process to identify these establishment agreements on the charter to engage in fundraising and commence operations by June 2024.
“The AEB will then be able to help African oil producing members -state to take advantage of the over 125 billion barrel reserves of oil and that of the over 75 trillion cubit scuff of gas that we have on the African continent
“This will not only help in raising the much needed foreign exchange from trading, exporting of these resources after they are transformed which again will lead to industrialization on the continent.’’
According to him, the bank will be able to improve developed oil assets, develop infrastructure which is more needed in terms of refineries, logistics, pipelines and help to build storage facilities.
“Which will move the equipment and facilities in a more secure way closer to the market and equally developing the capacity building of the people in the energy sector.
“We are looking forward to this new institution as we are working tirelessly with our partners hoping to sell the gap which is glaring in the sector.”
He noted that the challenges faced in the sector were not new adding that “First of all, a lot of the International banks have moved away from financing projects in the energy sector.
The firepower is not there to meet the 80 trillion dollars of requirement from the industry, he said.
“You see sectors like fintech which are attracting more money than investment in oil and gas or energy which is critical to industrialisation of the continent.
“We have been able to put together all the 700 commercial banks in Africa and the firepower is extremely limited.
“We have severe challenges in supporting the sector, whether in basic trade flow from a continent where we are net importers of products to fuel our industrialization, be it in developing upstream oil and gas projects or logistics support like pipelines, infrastructures, rehabilitation of refineries or building new refineries, maintaining existing infrastructures around the energy value chain.
“So, the challenges are very significant.
“And we are working with our partners which are the development financial institutions, commercial banks and corporations like Oilserv, Oando, Sahara, etc to put in place structures that will help mitigate some of these challenges and meet the requirements.
“But this is not sufficient,” he said.
Speaking also, the CEO of Development Reimagined, Hanna Wanjie Ryder, frowned at the continent’s low level of energy consumption.
“The current energy access in Africa is below 40 per cent.
“ It’s very bad that a large economy like Africa has less energy access. We need a significant amount of investment in infrastructure like pipelines and power plants etc, to drive the economy.
“ We need Afreximbank to finance these sectors and come up with African solutions to African problems and ensure that we come out stronger than where we are at the moment.”
The Chairman of Oilserv Group, Emeka Okwuosa, emphasised that development in Africa is tied to government support on harnessing its huge gas resources.
He said: “Africa is sitting on huge gas resources that can catapult it beyond the limit if adequately harnessed.
“Yes, we are open to decarbonising. But for the African continent, the fastest means of growing its energy sector and infrastructure is for an intentional development of its gas infrastructure. That is the closest energy mix to develop the sector.
“However, the government has a role to play in this and that is ensuring adequate support to the energy industries by setting the right policy to drive this agenda. “Also, Afreximbank will have to do more in ensuring the energy industries are funded adequately to drive this course.’’ Okwuosa said.
