•Stakeholders are calling on Africans to finance their annual investment needs of $190b
About $16 billion is being invested in oil and gas projects across Africa by the African Export Import Bank (Afreximbank) and the African Finance Corporation (AFC).
This was revealed yesterday at the African Refining and Distribution Association (ARDA) conference in Cape Town, South Africa.
This comes as stakeholders at the conference called on Africans to deposit funds on the continent to fund the more than $190 billion annual energy investment needed on the continent.
Of the banks’ investment, $15 billion was invested by Afreximbank while AFC has invested over $800 million with an additional over $200 million expected to be finalized.
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 continent.
Speaking on the sidelines of the conference, he noted that the continent must focus on shared infrastructure and be ready to finance itself if the projected development remains elusive.
Awembeng said the continent is in a critical situation as the demand for energy continues to rise against the backdrop of a growing population.
With the continent mainly dependent on the import of petroleum products while the demand for foreign exchange is up to $100 billion per year and the energy investment required annually is around $190 billion, Awembeng said that the development of large infrastructure, including, refineries that will meet the needs of the continent . be prioritized and supported.
Awembeng said the creation of the African Energy Bank remains sacrosanct to finance fossil fuels and Africa’s energy transition agenda.
Concerned by the rise in the price of imported petroleum products, Awembeng said Africa remains an importer of all refined products.
“Africa has not invested in refineries or refining capacity. We have not invested in storage facilities. We have not invested in enough pipelines to meet the demand. So with the COVID crisis, and now the Ukraine crisis we are now in a very difficult position .
“Many international banks and some banks that finance oil and gas transactions have withdrawn from Africa for several reasons; leaving the burden on African financial institutions and some development financiers like the African Import Export Bank to look into the issue.
“The challenge now is that we have a significant capacity to meet the demand of $190 billion per year to finance oil and gas requirements in Africa. Do we have the capacity on the continent to support the rehabilitation of $15 billion of refining capacity that is needed in North Africa, West Africa and Africa East. I don’t think we are.
“So we will have a crisis, if we look at what is happening with food security in terms of fertilizers and grain, we have to import plus the high cost of importing processed products. We are in a very challenging situation as a continent to be able to finance oil and gas,” said Awembeng .
Speaking on the Financing Infrastructure Project to Accelerate Africa’s Energy Transition, Senior Investment Associate, AFC, Shayo Olumide said AFC has committed $800 million to support the African refinery sector with an additional $210 million in the short-term pipeline.
Considering the need for sustainable finance, he said priorities for Environment, Sustainability and Governance are necessary for funding consideration.