The African Petroleum Producers’ Organization (APPO) is close to closing funding gap which has hindered major oil and gas projects in Africa, as the Organization said that it is putting the finishing touches to establish the Africa Energy Bank (AEB).
The Bank when established will offer alternative funding source for oil and gas projects on the continent after international financing institutions have started scaling back their funding, citing stringent conditions and environmental concerns.
Speaking at the just concluded Nigeria International Energy Summit (NIES) in Abuja, APPO’s Secretary General, Omar Farouk Ibrahim, explained that the drying investment in hydrocarbons posed a major challenge to the exploitation of fossil fuels on the continent, stressing that Africa has to take its destiny in its own hands.
The AEB aims to attract investment from countries such as Saudi Arabia, the United Arab Emirates, Qatar, and Kuwait, while addressing the funding challenges of oil and gas projects caused by the paradigm shift from fossil energy to renewable energies in the era of the energy transition.
African nations that are members of the APPO will collaborate with the Afreximbank, a pan-African multilateral trade finance institution, to launch the energy bank by the the end of 2023.
The Bank’s key objective is to finance oil and gas operations in Africa in order to curb external financing, including from the World Bank, which typically has its limitations. “This is going to focus essentially on funding oil and gas projects on the African continent because the funds have dried,” he said.
Noting that Africa has always depended on foreign technology and expertise to produce the resource, Farouk pointed out that “shareholding shall be open to all African oil companies and their national companies as well as other investors.” However, he also stressed that “no sovereign outside of the African continent or any investor outside of Africa shall be allowed to participate who has no shared vision of the bank.”