NCDMB challenges African nations on energy financing

Sopuruchi Onwuka

Implementation agency for the Nigerian local content policy, the Nigerian Content Development and Monitoring Board (NCDMB) has called on African nations to create a pool of funds for financing petroleum projects in order to guarantee energy security for the continent.

Executive Secretary, Engr Simbi Wabote, threw the challenge in Lagos at the 9th Anniversary Lecture hosted by the Real News Magazine.

In delivering his presentation on “Nigeria in the Unfolding Integration of African Market: The Oil and Gas Sector Perspective,” Engr Wabote made it clear that time has come for African energy producers to develop the technical and financial capacity for crew change. He explained that the petroleum industry holds the potential for both technology adaptation and revenues required to realize the goals of the continents intra-trade development.

He stated that industrial development and energy security are critical goals of the newly activated African Continental Free Trade Agreement (ACFTA), explain that petroleum energy remains the readily available factor in powering productivity in the continent.

The Oracle Today reports that industrialized nations and multilateral lending agencies have blacklisted fossil fuel projects, making oil and gas exploration and development financing a critical concern among producing countries and operating companies.

The indignation towards fossil fuel development follows the prevailing global apprehension about global warming and the mass movement for energy transition from fossil fuel.

The 26^th Conference of Parties (COP26) which ends in Glasgow, Scotland, this week committed over 100 industrialized nations and emerging economies to emission reduction targets that would entail drastic cuts in petroleum consumption. Pressure is also on portfolio investors, fund managers and international finance institutions to block petroleum and coal development funding.

Worse for Africa is that petroleum export remains the key foreign exchange earner for key economies; and the renewable energy industry in the continent is still in infancy, low in capacity and cost prohibitive.

The situation, according to Engr Wabote, has raised enormous concerns about the future of the petroleum industry and economies in Africa. He also pointed out that the challenge of sourcing oil and gas project financing within the continent has become urgent.

He stressed that oil and gas revenue remains crucial for industrializing the continent. He added that petroleum remains the best energy option for rapid industrialization of the continent.

He hinted that AFCFTA provided a platform for member countries to collaborate and provide funding and the technology to operate and develop hydrocarbon projects.

He also canvassed for rapid development of the African midstream petroleum industry for production of refined petroleum fuels and petrochemical products needed to fuel manufacturing.

In stressing the market power of the ACFTA, Engr Wabote pointed at the continent’s combined population of 1.3 billion people and cumulative gross domestic product (GDP) of $3.4 trillion; explaining that the free trade region could address the low intra-regional trade in Africa estimated at 17 percent, compared to 69 percent obtainable in Europe and 59 percent obtainable in Asia.

Dwelling on the opportunities that could be realized by the Nigerian oil and gas industry against the AFCFTA agreement, Engr Wabote stated that the African oil and gas landscape provides huge opportunities for cross-border infrastructure to unlock development of stranded assets or bring energy closer to the people and such infrastructure also leads to lower unit development costs. 

According to him, infrastructure like the West Africa Gas Pipeline (WAGP) and ongoing Ajaokuta-Kaduna-Kano (AKK) gas transmission infrastructure could serve regional markets in West Africa and the Sahel region; and the SHI-MCI yard in Lagos could also serve the wider African market, being the only integration yard for heavy offshore production vessels in Africa.