Yemisi Izuora
The African Finance Corporation, AFC, has deployed about $800 million towards supporting Africa’s refinery sector with an additional $210 million in its near-term pipeline.
Cumulatively, the AFC and the African Export Import Bank (Afreximbank) are investing about $16 billion in oil and gas projects across Africa.
Global Head, Client Relations at Afreximbank, Rene Awembeng, said the company’s oil and gas portfolio exceeds $15 billion with a healthy pipeline across the entire continent.
Awembeng, made the disclosure at the ongoing African Refiners and Distribution Association (ARDA) conference in Cape Town, South Africa.
At the conference, stakeholders called for retention of funds within the continent to finance the over $190 billion yearly energy investment need of the continent.
About $15 billion of the funds is being invested by Afreximbank while AFC already invested over $800 million with additional over $200 million expected to be finalised.
Awembeng stated that the continent is in a critical situation where demand for energy continues to rise on the backdrop of surging population.
With the continent relying mainly on importation of petroleum products at a time when foreign exchange demand is hovering at $100 billion yearly and required energy investment annually stands at $190 billion, Awembeng said large infrastructure development, including, refineries that would meet demand on the continent must be prioritised and supported.
Awembeng said the creation of Africa Energy Bank remained sacrosanct to fund fossil fuel and Africa energy transition agenda.
Worried over the rising prices of imported petroleum products, Awembeng said it was regrettable that Africa remained an importer of all refined products.
“Africa has not invested in its refineries or refining capacity. We’ve not invested in our storage facilities. We’ve not invested in our pipelines sufficiently to meet the demand. So with the COVID crisis, and now the Ukraine crisis we are now in a very difficult position.
“A lot of the international banks and some of the banks that were financing oil and gas transactions have retreated from Africa for a number of reasons; leaving the burden on African financial institutions and some of the development financiers like the African Export Import Bank to look into the problem.”
“The challenge now is we have significant capacity to meet the demand of $190 billion every year to finance oil and gas requirements in Africa. Do we have capacity on the continent to support the $15 billion of rehabilitation of refining capacity required in North Africa, West Africa and East Africa. I don’t think we are.
“So we are going into a crisis where if you look at also what is happening with food security in terms of fertilizers and grain, we have to import plus the high costs of importation of refined products. We are in a very challenging situation as a continent to be able to finance oil and gas,” Awembeng said.
Speaking on Financing Infrastructure Projects to Accelerate Africa’s Energy Transition, Senior Investment Associate, AFC, Shayo Olumide said AFC has disbursed $800 million towards supporting Africa’s refinery sector with an additional $210 million in its near-term pipeline.
He said priority for the Environment, Sustainability and Governance is necessary for funding consideration.