African Energy Bank to kick-off  in June-APPO Scribe

The much awaited African Energy Bank (AEB) will kick-off before the first half of 2024 as envisioned by the African Petroleum Producers Organisation (APPO). 

Recall that the African Export-Import Bank(Afreximbank) had  late last year said that  it  was set to inaugurate the AEB in June 2024 to mitigate the crisis in the African energy sector.

The bank stated  this during a session on “Africa’s Energy Transition and Financing’’, at Inter-African Trade Fair (IATF) 2023 Trade Conference in Cairo, Egypt.

Confirming this on Tuesday, at the just-concluded  Sub-Saharan African Petroleum Companies (SAIPEC) organised by PETAN, APPO Secretary General, Dr. Omar Farouk Ibrahim  advocated for synergy among African countries, hinting that no African oil-producing country can provide the financial, technological, and marketing resources that it needs to be self-sufficient, hence the imperative for the energy  bank.

He added that “if resources are pooled together, African countries can go far.”

He advised Nigerian oil and gas companies to be diplomatic when engaging their counterparts from other African countries and to co-opt other nationals when planning to operate in foreign jurisdictions.

“You need to have diverse shareholding and include nationals from other countries when you move to other African countries to operate. Do not create the impression that you want to dominate,” he advised.

The APPO boss said the AEB will start operations in 2024 and would have $5billion capitalization, adding that the 18 member nations of APPO have started paying up their shareholding, which is $83million per country.

The AEB will be a veritable platform to fund oil and gas projects within the continent and mitigate the withdrawal of international financiers because of the clamour for renewable energy, he said.

Farouk Ibrahim  also confirmed that APPO was working to establish international research centres of excellence in different regions of the continent, which would cater to the research needs of oil companies operating in Africa and curb their dependence on international research centres for research solutions.

He stated that APPO is working to enhance the market for African oil and gas resources and ensure that crude oil and gas resources that are produced in Africa get consumed within the African continent.

“This is important because of the threat of energy transition, which is expected to substantially shrink the demand for crude oil and gas resources internationally,

“Another important and related action is the construction of a continent-wide pipeline system that could convey crude oil, refined products, and gas across different countries of the continent, he said.

The initiative  for AEB was conceived in 2022 when Afreximbank signed an agreement with APPO, during which  both parties are expected to collaborate on the establishment of  the bank in support of an Africa-led energy transition strategy.

The Director of Client Relations, Afreximbank, Rene Awambeng, said 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 Afreximbank, working on the sidelines with APPO, has decided to create another agency that will 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 walks of life.

Awambeng said the budgeted share per capital would be five million dollars.

“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 member-states 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 industrialisation on the continent.’’

He said the bank would be able to improve developed oil assets and develop infrastructure which was more needed in terms of refineries, logistics, pipelines, and building of storage facilities.

“This will help move the equipment and facilities in a more secure way closer to the market and equally develop 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.”

Awambeng noted that the challenges faced in the energy sector were not new, adding that a lot of the International banks had moved away from financing projects in the sector.

According to him, the firepower is not there to meet the 80 trillion dollar requirement from the industry.

“You see sectors like fintech are attracting more money than investment in oil and gas or energy which is critical to the industrialisation of the continent.